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THE  HIGH   COST  OF  LIVING 


THE 
HIGH  COST  OF  LIVING 


BY 
FREDERIC   C.   HOWE,  Ph.D.,  LL.D. 

COMMISSIONER  OP  IMMIOBATION    AT   THE  POBT   OP   NEW   TOBK 

AUTHOR  OF   "why    WAR,"    "SOCIALIZED   GERMANY,"   "  EOHOPEAN   CITIES    AT   WORK,' 

"  PRIVILEGE    AND    DEMOCRACY    IN    AMERICA,"     "  THE    MODERN 

CITY    AND    ITS    PROBLEMS,"    ETC. 


NEW  YORK 

CHARLES   SCRIBNER'S   SONS 

1917 


COPTRIGHT,    1917,    BY 

CHARLES  SCRIBNER'S  SONS 


PubUshed  October,  1917 


o 

Co 


69^3 


PREFACE 


The  high  cost  of  Hving  is  not  a  war  product.  The 
war  hastened  tendencies.  It  aggravated  conditions. 
It  gave  opportunities  for  speculation  and  extortion. 
But  the  cost  of  Hving  was  rising  rapidly  before  the 
war.  And  it  will  continue  to  rise  when  the  war  is 
over  unless  radical  steps  are  taken  to  prevent  it. 

The  last  few  years  have  witnessed  a  change  in 
the  economic  foundations  of  American  life.  Com- 
petition is  passing.  Monopoly  has  entered  into  al- 
most every  process  of  industry.  The  laws  of  de- 
mand and  supply  no  longer  protect  us.  A  host  of 
intermediaries  have  wedged  themselves  in  between 
the  producer  and  the  consumer,  each  one  of  which 
is  interested  in  taking  as  large  a  profit  for  himself 
as  possible.  This  is  not  only  true  of  food,  it  is  true 
of  almost  every  necessity  of  life.  Even  more  im- 
portant, the  control  of  the  land  and  resources  of  the 
earth  has  diminished  production.  It  has  excluded 
men  from  the  land.  It  has  limited  the  opportu- 
nities of  labor.  It  has  checked  initiative.  It  has 
reduced  the  amount  of  wealth  produced. 

Monopoly  is  responsible  for  the  conditions  which 
confront  us.     It  operates  in  the  following  ways: 

It  controls  the  natural  resources,  the  agencies  of 


•  ^7374-3 


vi  PREFACE 

transportation,  distribution,  and  marketing.  It 
has  increased  prices.  It  has  discouraged  agricul- 
ture. Tribute  is  exacted  from  the  consumer  at  one 
end  of  the  Hne  and  the  producer  at  the  other. 

It  reduces  the  output  of  wealth  of  all  kinds. 

It  limits  the  opportunities  for  labor  and  keeps 
down  wages  and  salaries. 

What  we  are  most  in  need  of  is  freedom;  freedom 
of  access  to  the  hundreds  of  millions  of  acres  of  land 
that  are  held  out  of  use;  freedom  of  access  to  ade- 
quate transportation;  freedom  in  distribution,  in 
marketing,  in  competition  all  along  the  line.  Mo- 
nopoly stifles.  It  strangles  the  labor  and  industry 
of  the  nation.  It  short-circuits  the  efforts  of  the 
manufacturer  and  the  farmer.  Colossal  as  is  the 
output  of  wealth  in  this  countiy,  the  possibilities  of 
production  have  scarcely  been  touched.  The  talent 
of  the  country  is  not  free  to  apply  itself  as  it  would 
if  the  land  and  resources  were  opened  up  to  use. 
Freedom  is  the  great  need  of  America,  freedom  from 
monopoly  in  all  of  its  forms,  but  most  of  all  in  its 
control  of  the  land,  of  transportation,  of  credit,  and 
of  distribution. 

It  is  not  the  tribute  that  monopoly  exacts,  it  is 
the  embargo  on  production  that  is  most  costly. 

These  evils  can  only  be  corrected  by  law,  by  legis- 
lation. Exhortation  will  not  bring  relief.  Nor  will 
criminal  proceedings,  trust-busting,  or  regulation  of 
prices.    We  have  tried  this  kind  of  regulation  for  a 


PREFACE  vii 

generation  and  monopoly  has  grown  rich  and  pow- 
erful under  it.  Monopoly  now  prefers  regulation. 
It  is  a  guarantee  against  competition  and  govern- 
ment ownership.  The  farmer  cannot  secure  relief 
by  his  unaided  efforts.  Nor  can  the  consumer.  Re- 
lief will  only  come  when  the  conditions  surrounding 
agriculture  and  the  means  of  distribution  are  radi- 
cally altered.  This  can  only  be  done  by  law.  And 
legislation  will  only  represent  the  producing  classes 
and  the  consumers  when  the  monopoly  interests 
which  now  control  our  life  are  driven  from  power 
and  the  state  becomes  an  agency  of  service,  of  co- 
operation, of  a  new  freedom.  When  people  rather 
than  privilege  rules,  then  the  food  problem,  the  agri- 
cultural problem,  the  social  problem  will  be  open 
to  solution. 

I  have  received  valued  assistance  in  the  prep- 
aration of  this  volume  from  Miss  Gertrude  Bor- 
chard,  assistance  which  I  desire  to  acknowledge. 

Frederic  C.  Howe. 

New  York,  September,  1917. 


CONTENTS 

PAOB 

Preface    v 

CHAPTER 

I.    The  Feeding  op  the  Nation 3 

II.    OtJR  Agricultural  Possibilities  and  Problems  13 

III,     The  Cost  of  Living  and  the  Food  Supply    .    .  19 

rv.    Gambling  in  Wheat 27 

V.     The  Packers  and  the  Cattlemen      46 

VI.     Cold  Storage  and  Food  Speculation 53 

VII.    The  Middlemen  and  Distributers 65 

VIII.    The  Transportation  Embargo 77 

IX.    Why  There  Is  Not  More  Food 86 

X.     Denmark:  An  Experiment  Station  in  Agricul- 
ture    103 

XI.    How  Australia  Controls  the  Food  Problem   .  117 

XII.    Opening  up  the  Land  to  Settlement      ....  128 

XIII.  Food  Control  in  Germany 139 

XIV.  From  Producer  to  Consumer      157 

XV.    Other  Items  in  the  Family  Budget 177 

XVI.    Freeing  the  Highways  op  the  Nation    ....  184 

XVII,    The  Embargo  on  Farming 192 

XVIII,     Land  for  the  Landless 201 

XIX.    Exploiting  the  Would-be  Farmer 213 

ix 


X  CONTENTS 

CHAPTER  PAGE 

XX,    The  Tenant  Farmer 220 

XXI.  Openino  up  the  Land  to  Agriculture     ....  227 

XXII.     The  Farmer  and  the  Banker 240 

XXIII.  A  New  Agricultural  Programme 250 

XXIV.  The  New  Era  in  Politics 259 

Index 273 


THE   HIGH   COST  OF  LIVING 


CHAPTER  I 
THE  FEEDING   OF  THE  NATION 

The  feeding  of  the  nation  has  been  left  almost 
wholly  to  chance  and  to  unorganized,  uncontrolled 
agencies.  Production  and  distribution  have  been 
permitted  to  evolve  from  the  conditions  of  a  half- 
century  ago  into  the  highly  complex  relationships 
of  a  whole  nation,  if  not  the  entire  world,  with  but 
little  official  concern  for  either  the  producer  at  one 
end  of  the  line  or  the  consumer  at  the  other. 

Before  the  coming  of  great  cities  each  community 
sufficed  for  itself.  The  marketmen  or  local  grocer 
bartered  for  food  with  the  neighboring  farmer,  and 
the  laws  of  demand  and  supply  regulated  produc- 
tion and  kept  prices  at  a  reasonable  figure.  This 
was  the  condition  up  to  a  few  years  ago. 

Cities  grew.  The  nation  became  a  market.  The 
Northwest  entered  into  competition  with  New  Eng- 
land, and  California  and  Florida  with  the  local 
truck-garden.  The  steamship  widened  the  market 
into  the  world.  Canada  and  the  American  North- 
west, Russia,  Australia,  and  South  America  pro- 
duced for  the  industrial  workers  of  the  world,  and 
the  prices  of  cereal  and  meat  products  were  fixed  in 
London  and  Liverpool.    Refrigerator-cars  brought 

3 


4  THE  HIGH  COST  OF  LIVING 

the  fruits  and  vegetables  of  Florida  and  California 
closer  to  New  York  than  the  near-by  farm  of  earlier 
generations,  while  the  cold-storage  plants  and  ter- 
minal warehouses  made  it  possible  for  perishable 
commodities  to  be  held  for  months  or  years  for 
their  ultimate  market. 

Prices  were  fixed  not  only  by  a  world  market  but 
by  an  all-the-year-around  market.  The  price  of 
butter  and  eggs  in  April  was  fixed  in  the  previous 
November,  just  as  the  price  of  meat  and  growing 
crops  was  fixed  during  the  harvesting  season. 

With  all  these  revolutionary  changes,  with  the  re- 
frigeration devices  and  the  means  for  placing  the 
products  of  the  world  upon  the  breakfast-table,  the 
control  of  a  multitude  of  agencies  as  well  as  the  pro- 
duction and  distribution  of  food  was  left  to  the 
anarchistic,  chaotic  direction  of  thousands  of  indi- 
viduals, each  of  whom  was  thinking  only  of  maxi- 
mum profit  to  himself  rather  than  of  the  service  he 
was  performing  for  the  nation. 

Only  in  a  few  countries — notably,  Australia,  Den- 
mark, and  Germany — has  the  control  of  food  been 
viewed  as  a  matter  of  government  concern  or  sub- 
jected to  a  unity  of  direction  in  the  interest  of  the 
producer  and  the  consumer.  And  these  countries 
have  worked  out  means  for  social  control  of  food  in 
the  interest  of  the  nation.  In  most  of  the  other 
countries,  and  in  America  in  particular,  the  subject 
has  been  left  to  the  unregulated  license,  not  of  the 


THE  FEEDING  OF  THE  NATION  5 

producer,  not  of  the  consumer,  but  of  the  distribut- 
ing agencies  which  have  it  in  their  power  to  control 
not  only  prices  but  production  as  well.  Unregulated 
private  banking  and  usury  have  contributed  still 
further  to  the  disorganization  which  prevails,  while 
no  official  concern  has  been  shown  for  the  economic 
foundations  of  agriculture,  the  relation  of  the  people 
to  the  land. 

The  extent  to  which  this  whole  subject  of  the  feed- 
ing of  a  people  has  been  neglected  is  indicated  by  a 
comparison  with  finance  or  industry.  To-day  the 
credit  of  America  is  organized  in  every  detail.  The 
control  of  our  monetary  resources  has  been  so  mobil- 
ized that  it  is  under  the  direction  of  comparatively 
few  men,  subject  to  regulation  by  the  Federal  Re- 
serve act.  The  weekly  deposits  of  the  wage-earner 
in  a  distant  mining-camp  are  effective  for  credit  pur- 
poses in  distant  China  or  South  America  as  soon  as 
they  are  deposited.  The  total  resources  of  a  bank 
in  a  farming  community  are  readily  mobilized  for  a 
two-billion-dollar  loan  through  the  district  reserve 
cities,  and  from  them  to  New  York.  The  credit 
resources  of  the  country  are  known,  as  are  the  lia- 
bilities. Just  as  the  tiny  stream  emerging  from  the 
mountain  slopes  of  Colorado  ultimately  finds  its  way 
to  the  Gulf  of  Mexico,  so  every  dollar  in  every  bank 
in  America  is  potentially  organized  for  the  doing  of 
the  work  of  America  every  moment  of  time.  Yet 
credit  is  merely  an  agent,  an  agent  for  production. 


6  THE  HIGH  COST  OF  LIVING 

And  one  of  its  primary  purposes  is  the  feeding  of 
the  people  and  provision  for  their  wants. 

That  which  is  true  of  credit  is  true  of  many  in- 
dustries as  well.  The  great  steel  corporations  are 
self-contained  industries  reaching  out  to  different  sec- 
tions of  the  country,  or  even  to  distant  lands,  for  the 
more  efficient  performance  of  their  functions.  These 
corporations  own  great  iron-ore  deposits  in  Minnesota 
and  northern  Michigan,  in  Cuba,  and  in  other  for- 
eign parts.  They  own  their  own  coal-fields  and 
coking  plants.  They  own  natural-gas  fields  and 
limestone  quarries.  They  own  great  fleets  of  vessels 
which  ply  upon  the  Great  Lakes,  while  thousands 
of  miles  of  railroad  have  become  integral  parts  of 
their  industrial  processes.  The  Standard  Oil  Com- 
pany is  a  world-wide  agency.  It  owns  oil-fields  not 
only  in  America  and  Mexico,  but  in  Russia,  Rou- 
mania,  and,  in  fact,  all  over  the  world.  It  owns 
fleets  of  sailing  vessels,  pipe-lines,  and  oil-tank  cars; 
it  manufactures  almost  everything  that  it  uses  in 
connection  with  its  activities.  It  is  far  more  than 
a  self-contained  industiy.  It  owns  or  indirectly 
controls  banks,  trust  companies,  and  hundreds  of 
related  industries.  The  American  Tobacco  Com- 
pany reaches  from  the  tobacco  plantations  of  the 
United  States  and  Turkey  to  its  distributing  agency 
in  almost  every  city  in  the  land.  The  United  States 
Rubber  Company  owns  rubber-plantations,  while 
the  sugar-refineries  own  sugar-plantations  in  Cuba, 


THE  FEEDING  OF  THE  NATION  7 

Hawaii,  and  elsewhere.  Every  great  industry,  in 
fact,  is  organized  and  integrated.  It  has  ehminated 
one  profit-taking  intermediary  after  another  between 
the  soil  and  the  consumer.  It  acts  with  a  single 
mind.  It  knows  from  day  to  day  the  raw  materials 
available,  and  through  its  nation-wide  or  world-wide 
statistical  bureau  it  knows  the  fluctuations  in  de- 
mand. Financial  knowledge  and  industrial  know- 
ledge have  been  mobilized  in  a  hundred  great  private 
corporations,  and  their  control  has  been  so  concen- 
trated that  all  of  the  more  important  industrial 
activities  of  America  are  susceptible  of  control 
from  half  a  dozen  great  offices,  for  the  most  part 
situated  in  New  York. 

Yet,  while  this  perfection  has  been  achieved  in 
banking,  transportation,  and  industry,  the  greatest 
concern  of  all,  the  feeding  of  the  people,  is  wholly 
unorganized,  wholly  disintegrated,  and  up  to  the 
present  time  has  not  even  been  studied  from  the 
point  of  view  of  the  producer  and  the  consumer. 
It  is  hardly  too  much  to  say  that  the  feeding  of  the 
people  is  primarily  under  the  control  of  the  dis- 
tributing and  credit  agencies  of  the  nation,  which, 
guided  only  by  the  desire  for  private  profit,  deter- 
mine, indirectly  at  least,  how  much  shall  be  pro- 
duced, how  much  shall  be  paid  for  the  labor  of  those 
who  feed  America,  as  well  as  the  price  that  the 
ultimate  consumer  shall  pay.  And  springing  from 
the  private  control  of  this,  the  most  important  need 


8  THE  HIGH  COST  OF  LIVING 

of  the  nation,  many  consequences  have  followed, 
consequences  which  are  directly  traceable  to  the 
neglect  by  the  nation  of  fundamental  economic  con- 
ditions which  must  coexist  if  sufficient  food  is  pro- 
duced on  the  one  hand  and  sufficient  food  is  con- 
sumed on  the  other. 

It  is  true,  the  Federal  Government  has  elevated 
agriculture  to  a  place  in  the  cabinet.  Congress 
appropriates  annually  over  $20,000,000  for  the 
maintenance  of  the  Department  of  Agriculture.  It 
gathers  information;  it  encourages  production;  it  ad- 
vises the  farmer  about  soil,  planting,  and  the  care  of 
his  farm;  it  studies  soils  and  the  breeding  of  cattle; 
it  distributes  market  reports  to  aid  him  in  the  sale 
of  his  produce.  Nearly  all  of  our  States,  too,  main- 
tain agricultural  colleges  for  the  training  of  boys  and 
girls  in  scientific  agriculture.  They  teach  dairying, 
farm  management,  and  the  production  of  pedigreed 
seeds.  Farming  is  being  elevated  to  a  science  and 
the  potential  output  of  the  land  is  being  increased 
by  all  these  processes.  And  year  by  year  science  is 
demonstrating  that  there  is  no  known  limit  to  the 
yield  which  can  be  secured  from  the  land.  It  has 
been  estimated  that  20,000  men  properly  organized 
can  feed  2,000,000.  And  the  studies  of  agricultural 
experts  have  shown  that,  with  sufficient  labor  ap- 
phed,  enough  food  can  be  produced  on  a  tiny  bit  of 
land  to  feed  a  family.  Agricultural  science  has  al- 
ready demonstrated  that  the  limits  to  the  possibilities 


THE  FEEDING  OF  THE  NATION      9 

of  nature  have  not  been  reached  in  any  country  and 
that  many  times  the  present  population  of  the  world 
can  be  adequately  and  comfortably  fed  by  the  use 
of  the  knowledge  already  existing. 

Yet,  despite  all  this  expenditure  of  money  and 
effort,  despite  the  discoveries  of  science  and  the 
introduction  of  improved  machinery,  despite  the 
substitution  of  steam  and  gasolene  for  horse-power 
and  the  increase  in  the  effectiveness  of  human  labor, 
the  question  of  feeding  America  becomes  more  acute 
each  year,  while  the  high  cost  of  living  is  a  problem 
which  worries  not  only  the  worker  but  the  middle 
classes  as  well.  The  war  has  made  this  problem 
acute,  so  acute,  in  fact,  that  the  war  has  passed  from 
one  of  man-power  and  munition-power  into  one  of 
food-power.  Not  only  is  this  true  of  Austria-Hun- 
gary and  Germany,  it  is  true  of  England,  Russia, 
and  France  as  well.  And  now  America  is  confronted 
with  the  same  problem,  which  is  becoming  so  acute 
that  the  public-school  classes  have  been  dismissed 
in  order  that  boys  and  girls  may  be  organized  for  the 
planting  and  harvesting  of  crops.  The  whole  nation 
has  been  urged  to  cultivate  its  back  yards  and  to 
utilize  heretofore  neglected  fields  and  parcels  of  land. 
The  people  have  been  urged  to  economize,  to  hus- 
band their  food  supply.  Dietary  statisticians  sug- 
gest the  substitution  of  cheap  cereals,  and  the  worker 
is  solicitously  informed  that  he  can  live  upon  a  rice 
diet  if  he  but  makes  up  his  mind  to  do  so.    Even  the 


10  THE  HIGH  COST  OF  LIVING 

saving  of  potato-skins  has  been  urged  upon  the 
workers  by  advertisements  appearing  in  the  met- 
ropolitan press.  The  farmer  is  being  indignantly 
prodded  to  increase  the  acreage  under  cultivation, 
to  labor  a  little  harder,  while  the  consumers  are  ap- 
pealed to  to  limit  their  consumption,  already  re- 
duced far  below  the  American  standard  of  living  by 
famine  prices. 

Yet  with  all  these  appeals,  with  the  chambers  of 
commerce  and  countless  other  organizations  bending 
their  efforts  in  these  directions,  little  organized,  in- 
telligent thought  is  being  given  to  the  real  problem. 
Why  do  boys  and  girls  leave  the  farms  for  the  cities  ? 
Why  do  the  farmers  desert  their  holdings  to  become 
motor-men  or  workers  in  the  city?  Why  is  our 
agricultural  population  relatively  decreasing  and  the 
acreage  under  cultivation  increasing  but  slightly  in 
amount?  Why,  with  all  the  aids  of  science  and 
countless  agricultural  experiment  stations,  is  agri- 
culture less  attractive  than  it  was  to  oiu*  fathers, 
and  why  does  the  per-capita  wealth  produced  fail 
to  respond  to  all  of  the  improvements  in  agricultural 
production?  Why  have  so  many  of  the  advances 
in  civiKzation  passed  by  the  farmer?  Why  is  agri- 
culture a  neglected  if  not  a  despised  profession,  and 
why  among  other  industrial  classes  does  the  farmer 
feel  that  he-  is  of  least  concern  to  the  state  ?  Why 
do  agricultural  organizations  like  the  Greenback 
movement,  the  Grange,  the  Equity,  and  more  re- 


THE  FEEDING  OF  THE  NATION  11 

cently  the  Non-Partisan  Farmers'  Alliance  of  the 
Northwest  periodically  appear  in  politics,  make  a 
gallant  fight,  and  then  their  members  settle  down 
to  a  kind  of  political  despair?  What  is  the  matter 
with  our  food  supply?  What  is  the  trouble  with 
agricultui'e  as  a  profession?  To  what  is  the  high 
cost  of  living  really  attributable  and  with  it  the 
health  of  our  children  and  the  lowered  standard  of 
living  of  our  people  as  well  ? 

It  cannot  be  that  this  problem  is  insoluble.  It 
cannot  be  that  a  civilization  that  can  perfect  wire- 
less telegraphy,  the  flying-machine,  and  the  modern 
battle-ship ;  that  can  organize  science  to  systematize 
warfare — it  cannot  be  that  a  people  who  are  able 
to  perfect  medicine  and  whose  discoveries  have 
speeded  up  science  in  every  realm  of  hfe  is  impotent 
before  this,  the  greatest  social  problem  of  aU,  the 
feeding  of  the  people.  There  must  be  knowable 
economic  reasons  which  underlie  the  discourage- 
ment of  the  farmer  and  the  decadence  of  his  indus- 
try. It  must  be  possible  to  trace  the  economic 
forces  at  work  to  their  source,  and  after  ascertaining 
the  proximate  causes  for  these  conditions  to  correct 
them  by  constructive  political  action.  We  have  done 
this  in  industiy.  We  have  produced  the  dollar 
watch,  the  $350  automobile,  marvels  of  mechanical 
and  engineering  skill.  Electricity  has  been  made 
the  servant  of  man,  aiding  him  in  a  million  ways. 
The  power  of  Niagara  has  been  harnessed  and  is 


12  THE  HIGH  COST  OF  LIVING 

distributed  for  thousands  of  miles  to  cities,  towns, 
and  individual  factories.  The  desert  lands  of  the 
Far  West  have  been  reclaimed  by  the  storage  of 
water,  and  heretofore  barren  wastes  have  been 
made  to  yield  three  or  four  crops  a  year.  The 
bottoms  of  the  sea  have  been  compelled  to  yield  up 
their  secrets,  as  have  the  inscriptions  of  prehistoric 
times.  Yet  to-day  the  first  industry  of  man,  that  of 
keeping  himself  alive,  remains  the  least  organized 
and  certainly  the  least  sociaHzed  of  any  modern 
service. 


CHAPTER  II 

OUR  AGRICULTURAL  POSSIBILITIES  AND 
PROBLEMS 

The  explanation  of  these  problems  is  not  to  be 
found  in  the  niggardliness  of  nature  or  the  character 
of  oui"  people.  There  is  land  enough  and  water 
enough  and  labor  enough  to  produce  all  the  food  we 
need.  As  a  matter  of  fact,  the  United  States  should 
be  the  cheapest  country  in  the  world  in  which  to 
live.  Ours  should  be  a  land  of  overflowing  abun- 
dance; not  for  the  few  but  for  everybody;  not 
of  a  few  articles  but  of  every  kind  of  food.  Wages 
are  high,  it  is  true,  but  labor  is  more  productive  here 
than  elsewhere.  We  have  perfected  machinery  as 
have  no  other  people,  and  it  is  more  universally  used. 
We  have  resources  more  fertile  than  those  of  all 
Europe.  We  have  every  variety  of  climate  and  every 
kind  of  food.  The  soO  is  so  fertile  that  it  needs  but 
Httle  enrichment,  while  our  race  is  recruited  from 
the  most  versatile  in  Europe.  No  people  have  been 
so  inventive;  none  have  harnessed  steam  and  elec- 
tricity to  increase  the  power  of  man,  and  nowhere, 
unless  it  be  in  Austraha,  is  there  so  large  a  product 
per  man  as  in  the  United  States.  There  should  be 
no  difficulty  about  food,  fuel,  houses  to  live  in,  or 

13 


14  THE  HIGH  COST  OF  LIVING 

any  of  the  ordinary  comforts  of  life  if  we  had  con- 
served and  utilized  our  opportunities  as  we  should 
have  done. 

And  there  was  no  food  problem  up  to  a  very 
few  years  ago.  Food  was  very  cheap.  This  was 
true  of  all  the  staple  articles,  of  meat,  vegetables, 
fruits,  poultry,  and  dairy  products.  Food  was  so 
cheap  that  we  wasted  it.  Even  the  poor  wasted  it 
as  of  little  value.  There  were  no  high-cost-of-liv- 
ing  investigations  and  no  real  complaint  from  the 
farmer  or  consumer. 

There  is,  obviously,  land  enough  to  feed  ourselves 
and  all  our  friends,  and  feed  them  in  abundance. 
Of  that  there  is  no  doubt.  We  could  maintain  ten 
times  our  present  population  if  the  land  were  culti- 
vated as  it  is  in  some  portions  of  the  world  where 
intensive  agriculture  has  been  perfected.  The  farm 
acreage  of  the  United  States  is  nearly  seven  times 
that  of  Germany,  with  her  67,000,000  people,  or  of 
France,  with  40,000,000  people.  This  is  without 
considering  the  billion  odd  acres  not  yet  appropri- 
ated or  unavailable  for  cultivation,  which  is  equal 
to  all  the  land  under  tillage  at  the  present  time.^ 

iThe  total  area  of  the  United  States,  exclusive  of  Alaska,  is 
3,026,789  square  miles  or  1,937,144,960  acres.  Of  this  total  290,- 
759,000  acres  remain  unappropriated  for  one  reason  or  another, 
while  16,522,000  acres  are  still  in  pubhc  or  Indian  lands.  In  1910 
there  were  6,361,502  farms  in  the  country  and  478,451,750  acres 
in  inaproved  and  400,446,575  acres  in  unimproved  farms.  All  told, 
the  farm  acreage  of  the  United  States  in  1910  was  878,798,325 
acres.  Of  the  total  area  of  the  country  only  one-fourth  was  in  im- 
proved farms. 


OUR  AGRICULTURAL  POSSIBILITIES        15 

France  almost  feeds  herself,  while  in  Germany,  with 
all  her  intensive  agriculture,  there  are  great  stretches 
of  land  that  are  held  in  great  estates  and  are  in  a 
backward  state  of  cultivation;  and  Germany  could 
be  placed  inside  the  State  of  Texas  and  leave  enough 
room  round  about  the  edges  for  Switzerland. 

We  have  not  yet  begun  to  crowd  one  another  in 
this  countiy,  for  people  are  living  at  the  rate  of  only 
33  per  square  mile.  In  little  Belgium,  the  land  of 
intensive  agriculture,  there  are  671  persons  to  the 
square  mile;  in  France  there  are  191;  in  the  United 
Kingdom,  379.47;  in  Austria-Hungary,  197.31;  in 
Switzerland,  236.97,  and  in  Denmark,  which  coun- 
try feeds  herself  and  contributes  a  great  part  of  the 
food  supply  of  Great  Britain  and  Germany,  there 
are  183.56  persons  per  square  mile. 

Only  a  small  part  of  the  land  in  the  United  States 
is  cultivated  at  all,  and  a  much  greater  part  is 
cultivated  wastefully  or  inadequately.  Only  about 
one-half  of  our  cultivable  area  is  under  cultivation. 
Even  in  the  State  of  New  York,  with  the  best  and 
most  extravagant  market  in  the  world  at  its  doors, 
only  37  per  cent,  of  the  agricultm'al  acreage  is  under 
cultivation,  or  8,200,000  acres  out  of  22,000,000 
acres.  And  in  that  State,  with  its  population  of 
10,000,000  people,  only  375,000  are  agricultm-alists, 
and  9,625,000  are  engaged  in  other  pursuits. 

While  we  have  land  in  abundance  and  of  the  most 
fertile  kind,  while  we  have  invented  and  perfected 


16  THE  HIGH   COST  OF  LIVING 

farm  machinery,  while  the  telephone,  the  trolley, 
the  motor-car,  and  the  railroad  have  made  com- 
munication easy,  transportation  cheap,  and  life  in 
the  comitry  far  more  attractive  than  a  generation 
ago,  certain  things  are  happening  to  agriculture  that, 
unless  checked,  will  inevitably  bring  about  condi- 
tions similar  to  those  in  Great  Britain,  where  four- 
fifths  of  the  people  live  in  the  city  while  the  country- 
side is  denuded  of  people,  and  the  food  supply  of 
43,000,000  people  is  brought  in  from  the  United 
States,  Canada,  Australia,  South  America,  and 
Denmark. 

Among  the  outstanding  facts  bearing  on  the  sub- 
ject are : 

One — a  rapid,  unprecedented  increase  in  the 
price  of  food 

Two — a  stationary  production  or  substantial  fall- 
ing off  in  the  gross  amount  of  food  produced. 

Three — a  wide-spread  sense  of  discouragement  on 
the  part  of  farmers,  a  discouragement  which  is  justi- 
fied by  conditions. 

Four — a  rapid  increase  in  the  population  of  our 
cities  as  compared  with  the  rural  population.  In 
1900  the  urban  population  of  the  United  States  was 
31,609,000.  Ten  years  later  the  number  had  in- 
creased to  42,623,000,  an  increase  of  34.8  per  cent. 
During  the  same  period  the  rural  population  in- 
creased from  44,384,000  to  49,348,883,  or  an  increase 
of  11.2  per  cent. 


OUR  AGRICULTURAL  POSSIBILITIES        17 

Five — during  the  decade  1900-1910  the  number 
of  farms  increased  from  5,737,372  to  6,361,502,  or  an 
increase  of  10.9  per  cent.,  while  the  total  improved 
and  unimproved  land  in  farms  increased  by  but 
40,206,551  acres,  or  only  4.8  per  cent.  Yet  while 
the  increase  in  farm  acreage  was  but  4.8  per  cent, 
the  increase  in  the  value  of  the  land  was  118.1  per 
cent.  The  agricultural  land  of  the  country  in  1900 
was  valued  by  the  census  at  $13,058,007,995.  Ten 
years  later  it  was  valued  at  $28,475,674,169.  While 
the  rural  population  increased  11.2  per  cent,  and 
the  acreage  under  cultivation  4.8  per  cent.,  the  value 
of  the  land  under  cultivation  increased  118.1  per  cent, 
and  the  value  of  the  land  per  acre  108.1  per  cent. 

Six — of  the  total  of  878,798,325  acres  in  farms 
in  1910  only  about  one-half  was  improved,  there 
being  a  total  of  400,346,575  acres  that  were  unim- 
proved. 

Seven — the  working  of  farms  in  the  United  States 
is  steadily  and  rapidly  passing  from  the  hands 
of  owners  to  those  of  tenants  with  little  interest  in 
efficient  agriculture  or  the  improvement  of  theii- 
holdings.  In  1880  25.6  per  cent,  of  all  farms  were 
operated  by  other  than  owners;  in  1890  the  per- 
centage had  increased  to  28.4  per  cent.;  in  1900  it 
had  increased  to  35.3  per  cent.,  and  in  1910  it  had 
still  further  increased  to  37  per  cent.  In  some  parts 
of  the  country  from  60  to  70  per  cent,  of  the  farms 
are  cultivated  by  tenants  for  non-resident  owners. 


18  THE  HIGH  COST  OF  LIVING 

Here  are  some  of  the  economic  factors  undertying 
the  food  problem.  They  are  not  reassuring.  They 
indicate  a  decay  of  agriculture.  If  unchecked  they 
involve  national  disaster.  They  mean  a  continuing 
increase  in  the  cost  of  hving,  a  lower  standard  of 
living,  a  decadence  of  the  state,  and  ultimately  a 
nation  of  city  dwellers  on  the  one  hand  and  a  farm- 
ing peasantry  on  the  other,  like  that  found  in  other 
countries  where  the  tendencies  at  work  in  the  United 
States  have  reached  their  logical  conclusion.  Rome 
passed  through  such  an  evolution.  So  did  modern 
England.  Ireland  lost  half  her  people  because  of 
bad  agricultural  conditions  that  were  only  arrested 
when  the  nation  undertook  a  comprehensive  agricul- 
tural policy  in  the  land-reform  legislation  inaugurated 
by  Gladstone. 

America  is  finally  awakening  to  the  seriousness 
of  the  food  problem.  We  may  be  led  to  a  study  of 
agriculture  and  the  economic  legislation  necessary 
to  make  farming  more  attractive.  For  the  ultimate 
evil  is  to  be  found  in  the  economic  foundations  of 
agriculture,  which  must  be  radically  changed. 

First  let  us  consider  the  present  high  cost  of  living 
and  the  immediate  measures  for  relief.  For  that  is 
the  immediate  condition  to  be  remedied. 


CHAPTER  III 
THE  COST  OF  LIVING   AND  THE  FOOD  SUPPLY 

"  Prices  are  fixed  by  the  law  of  demand  and  sup- 
ply," the  speculators  say.  "If  the  demand  is  in 
excess  of  the  supply  prices  rise;  if  the  supply  is  in 
excess  of  the  demand  prices  fall.  We  do  not  make 
high  prices.  The  laws  of  political  economy  do. 
You  must  suspend  her  laws,  not  punish  us,  if  you 
do  not  get  enough  to  eat  or  have  to  pay  more  than 
you  like  for  food." 

That  prices  are  fixed  by  demand  and  supply  is  a 
principle  of  general  application  when  competition  is 
free  and  no  obstacles  prevent  the  free  play  of  com- 
petition. Moreover,  if  the  supply  of  some  article 
of  general  consumption  is  only  a  httle  below  the 
demand  prices  tend  to  rise  far  above  the  prices 
which  should  otherwise  prevail.  Then  as  prices  ad- 
vance the  demand  slackens  and  a  new  equilibrium 
is  estabHshed.  This  was  the  condition  which  pre- 
vailed in  our  food  supply  up  to  a  few  years  ago  when 
the  local  market  established  prices.  The  farmers 
made  a  comfortable  living,  and  the  cost  of  food  was 
not  an  item  of  serious  consideration  to  any  save  the 
very  poor.  Food  was  abundant  and  prices  were 
low,  as  they  should  be  in  this  countr}^    For  food 

19 


20  THE  HIGH  COST  OF  LIVLNG 

should  be  a  small  item  in  our  budget  even  with  the 
prosperity  and  the  great  export  demand  which  now 
prevails. 

But  the  price  of  food  has  mounted  skyward.  The 
poor  are  suffering  from  actual  want.  Persons  of 
reasonable  incomes  do  not  get  enough  to  supply 
their  needs,  while  those  of  relatively  large  incomes 
feel  the  pinch  of  the  cost  of  meat,  poultry,  eggs, 
butter,  sugar,  and  many  articles  that  a  few  years 
ago  were  the  commonest  of  articles  upon  their  tables. 

Is  there  any  justification  for  this  situation?  Are 
the  speculators  justified  in  their  defense?  Must  we 
control  the  laws  of  demand  and  supply,  or  is  the 
trouble  that  the  law  of  demand  and  supply  is  not 
permitted  to  operate  and  prices  are  fixed  arbitrarily 
by  the  speculators  who  have  themselves  created 
scarcity  conditions? 

Statistics  of  prices  and  food  supply  seem  to  dem- 
onstrate several  things: 

One — ^that  the  prices  we  are  paying  are  far  in  ex- 
cess of  what  we  should  pay,  even  with  the  law  of 
demand  and  supply  freely  operative; 

Two — that  there  is  not  as  much  food  produced 
per  capita  as  there  should  be  and  not  nearly  as  much 
as  could  easily  be  produced;  and 

Three — ^that  the  government  must  step  in  and  in- 
sure the  free  play  of  the  law  of  demand  and  supply 
and  also  suspend  the  operations  of  the  law  when  the 
supply  is  so  much  below  the  demand  that  artificial 


THE  FOOD  SUPPLY  21 

and  monopoly  prices  are  created  by  its  operation. 
In  other  words,  the  farmer  and  the  consumer  should 
be  given  the  fullest  possible  assurance  of  free  com- 
petition and  the  consumer  should  be  protected  from 
any  monopoly  price  because  of  a  shortage. 

First,  as  to  the  increase  in  costs  of  food  and  the 
condition  of  the  great  mass  of  the  people  in  conse- 
quence. 

The  April,  1917,  Review  of  the  United  States  Bu- 
reau of  Labor  Statistics,  discussing  the  rise  in  wages 
as  compared  with  the  rise  in  the  price  of  food,  says 
that  while  the  former  rose  nine  points  from  1912  to 

1916,  retail  food  prices  rose  twenty  points.  Food  rose 
in  price  twice  as  rapidly  as  wages.  In  the  four  years 
from  February  15,  1913,  to  February  15, 1917,  flour 
increased  69  per  cent.,  eggs  61  per  cent.,  and  potatoes 
224  per  cent.,  says  the  same  authority.  Anthracite 
range  coal  sold  in  New  York  for  $5.00  a  ton  in 
January,  1915.  In  January,  1917,  its  price  was 
$8.75  a  ton. 

Mr.  Amos  R.  E.  Pinchot,  in  a  statement  presented 
to  the  Senate  Committee  on  Finance  in  the  spring  of 

1917,  stated  that  the  rise  in  wages  in  the  five  years, 
1912-1917,  was  less  than  18  per  cent.  In  the  case 
of  most  professional  people,  shopkeepers,  farmers, 
etc.,  there  has  been  no  appreciable  increase  at  all. 
On  the  other  hand,  the  cost  of  living  has  gone  up  to 
such  a  degree  that,  according  to  the  figures  in  the 
New  York  Times  Annalist,  April  23,  1917,  the  prices 


22  THE  HIGH  COST  OF  LIVING 

of  the  twenty-five  most  common  and  necessary  food 
commodities  of  the  average  family  have  almost 
doubled  between  April,  1915,  and  April,  1917.  Ac- 
cording to  Dun's  index  figures  dairy  and  garden 
products  increased  84  per  cent,  in  price  between 
April  1,  1914,  and  April  1,  1917.  Meat  went  up  46 
per  cent,  in  the  same  period;  clothing  49  per  cent.; 
metals  69  per  cent.,  and  foodstuffs  105  per  cent. 
The  figures  of  the  Old  Dutch  Market,  Incoiporated, 
of  Washington,  D.  C,  show  that  during  the  period 
mentioned  there  was  an  average  increase  of  85.32 
per  cent,  in  a  fist  of  sixty  table  necessities,  including 
meats,  canned  goods,  eggs,  vegetables,  etc.  As  a 
consequence,  the  poor  can  no  longer  buy  the  same 
quality  of  food  they  were  previously  able  to  obtain, 
nor  can  they  buy  in  adequate  quantities. 

This  is  also  the  testimony  of  the  food  committee 
appointed  by  the  Commissioners  of  the  District  of 
Colmnbia,  which  stated: 

^'Interesting  figures  were  obtained,"  says  the  com- 
mittee, ''from  the  proprietors  of  some  of  the  smaller 
stores  whose  business  is  with  the  poorer  people. 
They  show  clearl}^  that  the  poor  have  been  com- 
pelled to  resort  to  the  strictest  economy  in  order  to 
provide  food,  on  account  of  high  prices.  Their  pur- 
chases are  of  the  cheapest  possible  articles,  and  in 
smaller  quantities  than  heretofore.  The  sale  of  ordi- 
nary cuts  of  meats  in  this  class  of  stores  seems  to 
have  been  discontinued,  and  the  meat  now  pur- 


THE  FOOD  SUPPLY  23 

chased  consists  of  hog  hvers,  hog  kidneys,  neck 
bones,  hog  faces,  etc." 

That  similar  conditions  hold  true  in  the  poorer 
sections  of  New  York  is  evidenced  by  the  testimony 
of  Miss  Helen  Todd,  who  was  appointed  to  investi- 
gate the  effect  of  the  high  cost  of  food  on  school 
children  and  reported  that  their  scholarship  had 
been  measurably  lowered  through  malnutrition. 

In  the  important  item  of  shoes  we  have  the  word 
of  Mr.  James  Coward,  the  well-known  shoe  manu- 
facturer, that  staple  shoes  that  were  sold  at  $3.95  a 
pair  two  years  ago  sell  to-day  for  $6.50.  Kidskin 
that  was  32  cents  a  foot  a  year  ago  is  now  80  cents 
a  foot.  Ajid  the  price  of  shoes  is  still  climbing,  with 
the  prospect  that  there  will  be  a  still  greater  increase 
this  year  than  last. 

Contrasted  wath  these  hardships  which  affect  the 
great  bulk  of  our  people  is  the  economic  position  of 
2  per  cent,  of  them,  who  own  among  them  65  per 
cent,  of  the  countiy's  total  wealth.^  It  is  to  this 
class  and  those  just  below  them  that  the  great  pros- 
perity about  which  we  have  heard  so  much  lately 
has  fallen.  The}^  are  the  stockholders  and  directors 
of  the  big  coiporations  which  have  grown  rich  on 
war  profits,  the  holders  of  stock  in  the  munitions 
industry,  and  the  directors  of  the  loan-floating  bank 
syndicates.  War  profits  have  not  gone  to  clerks, 
teachers,  professional  men,  or  persons  with  a  fixed 

*  Estimate  of  Professor  King,  of  the  University  of  Wisconsin. 


24  THE  HIGH  COST  OF  LIVING 

income.  They  have  increased  wages  far  less  than 
they  have  increased  costs  of  food,  fuel,  clothes,  and 
rent,  but  they  have  enriched  the  privileged  classes 
and  the  producers  of  war  materials  and  supplies 
enormously.^ 

Is  there  any  justification  for  this  increase  in  the 
cost  of  food  ?  Was  there  such  a  shortage  as  explains 
the  increase  of  84  per  cent,  in  dairy  and  garden  prod- 
ucts and  105  per  cent,  in  foodstuffs  between  April, 
1915,  and  April,  1917,  as  reported  by  the  New  York 
Times  Annalist. 

Secretary  of  Agriculture,  Mr.  Houston,  says  that 
high  prices  are  not  due  to  actual  shortage.  There  is 
enough  food  produced.  Despite  a  33  per  cent,  in- 
crease in  population  between  1899  and  1915,  the 
production  of  food  per  capita  has  remained  substan- 
tially the  same  in  many  staple  foods.  It  has  in- 
creased in  some  and  only  fallen  in  a  few.  His  fig- 
ures of  food  production  for  leading  articles  of  food, 
as  stated  in  a  published  interview,  are  given  in  table 
on  opposite  page. 

The  per-capita  production  of  sugar  has  increased 
threefold  in  sixteen  years;  in  eggs  there  is  a  slight 
increase  reported,  but  in  meats,  milk,  and  cereals 
there  has  been  a  substantial  falling  off.  Yet  the 
price  of  sugar  has  risen  as  have  other  articles,  while 
those  cereals  in  which  there  has  been  an  increase  in 

*  From  statement  and  statistics  presented  before  Senate  Com- 
mittee on  Finance  by  Mr.  Amos  R.  E.  Pinchot. 


THE  FOOD  SUPPLY 


25 


production  have  acted  much  as  have  those  in  which 
the  production  has  fallen. 
We  are  not  therefore  paying  a  scarcity  price  but 

FOOD   SUPPLY   OF   THE   UNITED   STATES 


Total  Prodttction 

Per-Capita 
Production 

1899 

Meats — beef,  veal,  mutton, 

and  pork  (pounds) 

18,865,000,000 

19,712,000,000 

22,378,000,000 

Milk  (gallons) 
7,265,804,304 
7,466,406,384 
7,696,844,000 

Eggs  (dozens) 
1,214,000,000 
1,591,000,000 
1,811,000,000 

Cereals — corn,  wheat,  and 
rice  (bushels) 
3,333,868,710 
3,257,407,468 
4,094,986,399 

Potatoes  (bushels) 
273,318,167 
289,194,965 
359,103,000 

Sugar  (pounds) 
486,006,871 
1,688,390,143 
2,025,680,000 

248.2 
213.9 
219.6 

95.6 
81.0 
75.5 

17.0 
17.3 

17.8 

43.9 
35.3 
40.2 

3.6 
4.2 
3.5 

6.4 
18.3 
19.9 

1909 

1915 

1899 

1909 

1915  (estimated)  . 
1899 

1909 

1915 

1899 

1909 

1915 

1899 

1909 

1915 

1899 

1909 

1915 

a  price  either  artificially  created  by  speculation  or 
a  price  unduly  high  because  the  supply  is  not  up 
to  the  reasonable  demand  of  the  country,  just  now 


26  THE  HIGH  COST  OF  LIVING 

enjoying  an  unusual  degree  of  prosperity,  in  which 
the  shortage  of  supply  has  given  the  whole  output 
a  higher  value  than  should  prevail.  Speculation  is 
unquestionably  responsible  for  a  great  part  of  the 
increase.  And  some  method  of  pnce-fixing  may  be 
necessary,  even  with  speculation  eliminated,  to  keep 
down  prices  due  to  the  shortage  of  some  supplies. 

But  the  startling  fact  is  that  food  production  per 
capita  in  the  United  States  is  falling.  Despite  all 
of  the  contributions  of  the  government,  of  agricul- 
tural schools,  of  farm  machinery,  there  is  less  food 
produced  per  capita  than  there  was  sixteen  yeare 
ago.  Something  is  the  matter  with  agriculture  in 
America.  These  conditions  will  be  discussed  in 
later  chapters. 

First  let  us  consider  as  to  whether  the  alleged 
food  shortage  explains  the  great  increase  in  prices 
and  the  extent  to  which  the  supply  of  food  and  its 
price  has  been  artificially  controlled  by  the  distrib- 
uting agencies,  middlemen,  speculators,  etc.,  which 
have  come  into  so  much  prominence  in  this  field 
during  the  last  ten  years. 


CHAPTER  IV 

GAMBLING   IN  WHEAT 

A  GREAT  part  of  our  wheat,  the  great  food  staple 
of  the  world,  comes  from  the  American  Northwest. 
This  is  the  country's  granary.  But  the  farmer  does 
not  fix  the  price  of  wheat  as  do  other  producers 
of  their  products.  He  does  not  even  deal  with  the 
buyer.  The  price  of  wheat  is  fixed  for  the  most  part 
quite  arbitrarily  by  the  grain  exchanges  and  stock- 
market  quotations  in  Chicago  and  MinneapoHs. 
And  although  the  farmers  produced  a  bOlion  odd 
bushels  of  wheat  in  1916,  and  although  the  price 
reached  almost  prohibitive  figures  to  consumers,  the 
farmers  have  not  received  any  war  prices  as  have 
the  munition-makers,  steel-mills,  coal  and  copper 
miners,  and  other  industries  stimulated  by  the  war. 
The  war  profits  of  the  farmers  have  gone  to  specu- 
lators of  the  grain  exchanges  of  Chicago  and  Minne- 
apolis, which  are  the  price-fixing  agencies  of  wheat, 
corn,  meat,  and  other  staple  articles  of  food.  This 
is  one  of  the  strangest  anomalies  of  our  life.  The 
price  of  the  chief  article  of  food  for  a  great  part  of  the 
civilized  world  is  fixed  by  a  group  of  men  in  the 
grain-pits  of  Chicago  and  Minneapolis  who  have  no 

interest  whatever  in  wheat  except  as  a  commodity 

27 


28  THE  HIGH  COST  OF  LIVING 

whose  universal  use  makes  it  the  easiest  of  all  things 
in  which  to  speculate. 

Chicago,  with  its  railroad-lines  stretching  out  into 
all  sections  of  the  countiy,  is  the  headquarters  of 
the  trade  in  produce.  Yet  only  a  negligible  part  of 
the  wheat  of  the  country  finds  its  way  to  this  centre. 
In  1915,  out  of  1,000,000,000  bushels  only  50,000,000 
bushels  were  actually  received  in  Chicago.  But  the 
board  of  trade  fixes  the  price  of  all  wheat,  either 
directly  or  indirectly.  It  sells  paper  wheat  in  its 
daily  speculations,  and  the  quotations  of  the  pit  are 
the  market  prices  of  the  country.  Prices  of  other 
commodities  are  fixed  in  the  same  manner.  And 
the  prices  quoted  from  day  to  day  have  no  relation 
to  supply  or  demand,  although  the  reported  supply 
is  used  as  a  justification  of  the  speculators'  prices.^ 

For  instance,  in  1916,  when  the  price  of  wheat  and 
flour  rose  to  a  high  figure,  the  crop  was  large  enough 
to  cover  all  domestic  needs  and  leave  a  surplus  of 
122,000,000  bushels  for  export.  Since  the  begin- 
ning of  the  wheat  year,  July  1,  1916,  down  to  De- 
cember only  68,000,000  bushels  of  the  surplus  had 

*  The  Chicago  Board  of  Trade,  which  with  the  Minneapolis  and 
Milwaukee  organizations  is  the  chief  grain-pit  of  America,  specu- 
lates daily  in  about  twenty-five  million  bushels  of  wheat,  which  ia 
about  twice  the  amount  of  actual  wheat  received  in  Chicago  in  a 
year.  Members  of  the  MinneapoUs  Chamber  of  Commerce  gamble  in 
about  ten  biUions  of  futures  every  year,  the  actual  receipts  of  that 
city  being  about  two  hundred  million  bushels  a  year.  For  every 
bushel  of  wheat  actually  sold  on  the  exchange  at  MinneapoUs  fifty 
bushels  of  paper  wheat  are  sold  on  speculation.  See  63d  Congress 
hearing  before  Committee  on  Rules  of  H.  R.  424,  pp.  31,  57,  158, 
and  159. 


GAMBLING  IN  WHEAT  29 

been  exported,  leaving  a  visible  supply  of  63,000,000 
bushels,  not  including  millers'  stocks  and  seed  re- 
quirements, as  compared  with  only  46,820,000  at 
the  same  time  in  1915,  which  was  a  year  of  bumper 
crops.  Yet  the  price  of  wheat  and  flour  was  forced 
up  to  unheard-of  figures. 

The  corn  crop  of  1916  amounted  to  2,700,000,000 
bushels,  one  of  the  greatest  corn  crops  in  our  history, 
the  maximum  having  been  3,124,746,000  bushels  in 
1912  and  the  average  about  2,700,000,000  for  the 
past  twelve  years.  At  the  beginning  of  the  year 
there  remained  in  the  hands  of  the  farmer  1,138,- 
000,000  bushels,  the  greatest  carry-over,  with  a  sin- 
gle exception,  since  1907.  Under  these  conditions 
there  is  little  justification  for  the  high  prices  of 
staple  foods,  in  spite  of  the  big  export  demand. 

Through  the  Board  of  Trade  the  big  operators 
maintain  an  autocratic  control  over  basic  prices. 
They  drive  down  prices  when  the  farmer  sells  dur- 
ing the  summer  months  and  inflate  them  as  soon  as 
the  supply  has  been  purchased.  The  speculative 
nature  of  grain  prices  was  shown  by  the  collapse  of 
the  market  after  November  22,  1916.  The  rumor 
was  started  that  the  President  was  arranging  a  truce 
in  th«  European  war  to  begin  at  Christmas  and 
possibly  become  permanent.  December  wheat  de- 
clined sixteen  cents  a  bushel  in  spite  of  all  the  talk 
of  a  short  crop  and  great  European  demand.  This 
particular  collapse  was  due  to  the  powerful  packing 


30  THE  HIGH  COST  OF  LIVING 

interests,  whose  purposes  it  suited  at  that  time  to 
"bear"  the  market  and  bring  down  prices.  This 
break  in  prices  was  only  temporary,  however,  and 
the  price  soon  cHmbed  back  to  the  previous  high 
level. 

For  years  the  farmers  of  the  Northwest  have  been 
protesting  against  this  control  of  their  industry  by 
men  who  contribute  nothing,  who  produce  nothing, 
{  but  who  take  in  profits  nearly  as  much  as  the  farmers 
I  themselves  receive  for  their  labor,  their  capital,  and 
fc  the  use  of  their  land.  They  have  appealed  to  Con- 
ii  gress  and  the  State  legislatures  for  protection,  but 
they  have  appealed  in  vain.  Finally,  in  North 
Dakota  they  initiated  several  measures  by  petition 
and  submitted  them  to  referendum  vote.  The  mea- 
sures were  carried  by  overwhelming  majorities  at 
the  election,  but  the  State  officials  refused  to  carry 
the  laws  into  execution.  The  Non-Partisan  League 
came  into  existence  in  1916  as  the  last  recourse  of 
70,000  farmers  in  one  of  the  largest  agricultural 
States  in  the  West.  It  was  a  final  protest  at  the 
polls  against  the  grain  gamblers,  warehousemen, 
packers,  banks,  and  terminal  agencies  which  con- 
trolled the  prices,  the  marketing,  the  milling,  and 
the  distribution  of  wheat,  corn,  and  other  food 
products.  The  league  nominated  its  candidates  for 
the  legislature  and  for  State  offices  and  swept 
everj^hing  before  it  at  the  election  of  1916.  Its 
platform  consisted  of  a  programme  for  State-owned 


GAMBLING  IN  WHEAT  31 

grain  warehouses,  abattoirs,  and  grain  terminals, 
for  cheap  farm  loans  and  the  untaxing  of  farm  im- 
provements. It  was  a  programme  of  state  socialism 
and  modified  single  tax. 

For  years  the  farmers  of  North  Dakota  had  strug- 
gled against  the  distributers  who  control  the  mar- 
ket. They  are  for  the  most  part  Americans  and 
Scandinavians,  owning  large  farms  of  from  100  to 
1,000  acres  in  extent.  At  the  end  of  the  year  they 
were  often  as  badly  off  as  they  were  at  the  beginning, 
and  if  a  bad  season  intervened  they  often  faced 
bankruptcy.^  For  years  they  had  presented  their 
claims  before  the  State  legislatures  of  the  Dakotas 
and  Minnesota.  They  appeared  before  Congress. 
But  they  were  unable  to  secure  any  relief.  Yet  their 
investigations,  made  after  careful  scientific  study, 
showed  that  nearly  one-half  of  the  value  of  their 

'  Mr.  Cantrill:  "Is  it  your  contention  that  if  you  can  secure  the 
relief  asked  for  under  the  Manahan  resolution  it  will  result  in  making 
the  grain  business  for  these  farmers  a  profitable  business  instead  of, 
as  to-day,  a  losing  business?  That  is  the  point  I  want  to  get  at. 
Is  this  operation  that  you  complain  of  forcing  the  farmers  to  sell 
their  wheat  at  a  loss?" 

Mr.  Drake:  "  I  would  answer  both  those  questions  in  the  affirma- 
tive. /  venture  to  assert  that  for  the  past  three  years  (1911-1914)  the 
average  farmer  has  raised  and  marketed  his  wheat  and  grain  of  all  ki7ids 
in  the  Northwest  at  a  positive  loss." 

"There  has  not  been  a  year  in  the  past  three  years  (in  the  Red 
River  Valley  of  the  North)  that  the  average  farmer  has  raised  wheat 
and  after  paying  for  the  cost  of  raising  it,  has  not  suffered  an  actual 
loss  in  the  marketing  of  his  product  after  it  has  been  passed  thi-ough 
the  machinery  for  distribution  provided  by  this  private  club,  known 
as  the  Minneapohs  Chamber  of  Commerce." 

Hearing  before  the  Committee  on  Rules,  House  of  Representa- 
tives, 63d  Congress,  Second  Session,  on  House  Resolution  424,  p. 
139. 


32  THE  HIGH  COST  OF  LIVING 

wheat  crop  was  taken  from  them  every  year  by  the 
warehousemen,  grain  exchanges,  and  middlemen, 
who  controlled  the  market.  The  loss  from  July  1, 
1915,  to  January  1, 1916,  amounted  to  $302,832,000. 
For  every  $4  received  by  the  farmer,  $3  was  taken 
from  him  by  the  middlemen,  and  especially  by  the 
gambling  grain  exchanges.  This  much  was  either 
taken  from  the  farmers  or  added  to  the  price  which 
the  consumer  paid. 

Speaking  of  speculation  in  flour  and  its  cost  to 
the  consumer,  Mr.  Herbert  Hoover  says: 

"The  second — that  is,  elimination  of  speculation 
and  evil  practices — is  fundamentally  the  most  diffi- 
cult and  must  fill  all  concerned  with  the  most  con- 
tinuous and  deepest  anxiety.  How  important  it  is 
that  we  should  arrive  at  some  method  of  excluding 
the  legitimate'  and  illegitimate  speculation  from 
trades  may  be  perhaps  emphasized  if  we  consider 
what  has  happened  during  the  past  year  in  the  mat- 
ter of  flour.  If  we  assume  that  the  farmer  last  year 
received  an  average  of,  at  the  highest,  $1.60  per 
bushel  for  his  wheat,  then,  with  the  addition  of  the 
normal  manufactuiing  cost,  righteous  profits  of  dis- 
tribution, the  wholesale  price  of  flour  should  not 
throughout  the  country  in  the  larger  consuming 
centres  have  exceeded  $9  per  barrel,  and  yet  the 
price  of  flour  at  a  great  many  centres  during  the  past 
few  weeks  has  been  as  high  as  $15  per  barrel  through- 
out the  country  and  probably  averages  over  $14. 
Some  one  is  taking  $5  per  barrel  on  10,000,000  bar- 
rels per  month,  which  is  marketed  in  this  country. 
If  this  situation  continues,  this  is  $50,000,000  per 
month  taken  out  of  the  American  public,  and  since 


GAMBLING  IN  WHEAT  33 

the  raise  in  the  price  of  flour  above  S9  per  barrel, 
and  before  the  new  crop,  we  may  assume  rightly 
that  over  $250,000,000  will  have  been  extracted 
from  the  consumer  in  excess  of  normal  profits  of  the 
trade  and  distribution.  The  manufacturers  and 
normal  traders  have  not  had  this  difference;  it  lies 
in  speculation  and  outside  the  genuine  trades,  and 
the  higher  trading  margins  forced  by  the  speculative 
incidence  of  war."  ^ 

Speculation  in  wheat  and  the  robbery  of  the  farmer 
is  accomplished  in  three  ways.  The  worst  offenders 
are  the  so-called  grain  exchanges,  which  operate 
in  Minneapolis  and  Chicago  and  which  fix  the  price 
of  wheat.  The  exchanges  masquerade  as  chambers 
of  commerce  or  boards  of  trade.  In  reality  they 
are  speculative  exchanges  like  the  Stock  Exchange 
in  Wall  Street.  They  deal  in  futures.  Controlling 
the  quotations  of  wheat  all  the  year  round  by  fic- 
titious sales,  they  fix  the  price  which  the  farmer 
receives.  They  depress  prices  during  the  months 
when  the  farmer  sells,  and  then,  after  having  bought 
in  the  supply  on  their  own  terms,  they  either  put 
up  the  price  or  permit  it  to  assume  its  normal  price 
in  the  markets  of  the  world.  They  bear  the  market 
when  the  farmer  is  selling  and  bull  it  after  they 
have  acquired  the  available  stock.  The  practice  is 
the  same  as  that  which  prevails  in  the  cattle  markets 
at  Chicago,  Omaha,  Kansas  City,  and  elsewhere; 

1  Address  before  United  States  Senate  committee  on  agriculture 
and  foroatry,  June  19,  1917. 


34  THE  HIGH  COST  OF  LIVING 

it  is  the  same  practice  as  that  pursued  by  the  egg 
and  produce  exchanges  of  Chicago  and  Elgin,  HI., 
and  other  cities.  The  price  is  made  artificially  low 
by  stock-market  quotations  during  the  season  of  the 
summer,  and  then  in  the  fall  and  winter  it  is  arti- 
ficially raised  against  the  consumer. 

Why,  it  may  be  asked,  does  not  the  farmer  hold 
his  wheat  for  the  inevitable  rise,  if  this  is  the  prac- 
tice ?  In  the  first  place,  the  farmer  has  to  store  his 
wheat  while  waiting  for  the  rise.  And  the  ware- 
houses are  owned  or  controlled  by  the  same  interests 
that  control  the  grain  exchanges.  And  they  work 
in  sympathy  with  the  great  milling  establishments. 
The  millers  will  not  buy  of  the  farmers  direct.  ''Un- 
less you  belong  to  the  Board  of  Trade"  (the  grain 
exchange),  the  milling  houses  say  to  the  farmers 
who  have  organized  their  own  co-operative  elevators, 
"we  will  not  buy  your  wheat." 

In  addition,  the  cost  of  storage  is  so  high  and  the 
railroad  and  terminal  facihties  are  so  inadequate 
and  uncertain  that  the  farmer  is  often  forced  to  sell 
on  the  buyers'  terms.  He  cannot  hold  on  for  six 
months,  for  he  has  to  meet  his  loans  to  the  bank. 
The  farmer  is  usually  a  borrower.  The  banks  which 
advance  him  money  on  his  wheat,  cattle,  and  corn 
are  largely  under  the  control  of  or  are  influenced  by 
the  same  men  who  own  the  warehouses,  the  mills, 
and  operate  on  the  food  exchanges.  And  a  mere 
suggestion  from  the  bank  is  enough  to  frighten  the 


GAMBLING  IN  WHEAT  35 

farmer,  for  he  fears  that  his  loan  may  be  called, 
his  farm  may  be  sold,  or  he  will  be  denied  credit 
the  following  season.  The  farmer  of  the  West, 
whom  we  think  of  as  the  most  independent  of  per- 
sons, is  often  the  most  helpless.  He  has  but  one 
market,  and  he  often  has  to  sell  or  be  closed  out 
when  the  auctioneer's  mallet  falls. 

In  a  hearing  before  the  Senate  Committee  on 
Agriculture  for  the  consideration  of  the  Lever  food- 
control  bill  enacted  in  1917  the  following  dialogue 
occurred  between  Senator  Kenyon,  of  Iowa,  and 
Commissioner  John  J.  Dillon,  of  New  York: 

Senator  Kenyon:  Would  you  abolish  these  ex- 
changes— the  Board  of  Trade  in  Chicago  ? 

Mr.  Dillon:  I  would,  every  one  of  them. 

Senator  Ej:nyon  :  We  could  reach  them  by  tax- 
ation. 

Mr.  Dillon:  I  do  not  know  of  a  Board  of  Trade 
that  is  anything  but  a  curse. 

At  the  same  hearing  Senator  Gronna,  of  North 
Dakota,  made  the  statement: 

"The  mills  are  the  big  consumers  of  wheat;  that 
is,  they  manufacture  it.  Minneapolis  is  the  largest 
milling  city  in  the  world.  The  farmers  are  discour- 
aged over  the  prices  that  they  have  been  receiving 
in  the  years  they  have  had  large  productions.  They 
have  had  to  sell  the  products  at  less  than  cost.  So  much 
so  that  they  have  gone  to  work  and  invested  money 
and  built  one  terminal  elevator  in  the  city  of  St. 
Paul,  but  after  they  had  the  elevator  built  and 


36  THE  HIGH  COST  OF  LIVING 

stored  the  grain  in  it,  they  did  not  have  any  cus- 
tomers.   The  big  mills  refused  to  buy  from  them."  ^ 

A  study  of  the  daily  cash  quotations  for  contract 
grades  of  wheat  on  the  Chicago  Board  of  Trade, 
during  the  six  months  from  July,  1915,  to  January, 
1916,  shows  how  these  manipulations  in  price  are 
affected.  The  crop  of  the  preceding  year,  1914, 
was  sold  out  in  the  winter  and  spring.  Then  the 
prices  on  stock  quotations  began  to  drop.  They 
fell  30  cents  a  bushel  during  the  month  of  May. 
There  was  a  drop  of  68  cents  per  bushel  from  the 
last  day  of  April  to  the  lowest  prices  paid  during 
August  and  September.  Only  market  manipulation 
could  have  caused  the  slump,  for  the  world  demand, 
which  fixes  real  prices,  did  not  fall  off  during  these 
months,  and  in  December,  1915,  prices  rose  again 
until  they  reached  $1.38  a  bushel.  The  average 
price  paid  the  farmers  of  the  Northwest  during  the 
previous  six  months,  when  the  price  was  depressed, 
was  not  above  85  cents  on  a  crop  of  468,000,000 
bushels. 

The  Chicago  Daily  Trade  Bulletin,  the  organ  of 
the  association  of  grain  buyers,  or  the  grain  mo- 
nopoly, makes  what  is  in  effect  a  confession  of  how 
the  manipulation  of  prices  is  brought  about — a 
manipulation  always  to  the  disadvantage  of  the 

1  Hearing,  Committee  on  Agriculture,  U.  S.  Senate,  65th  Con- 
gress, Production  and  Conservation  of  Food  Supplies,  part  3,  pp. 
218,  241  (1917). 


GAMBLING   IN   WHEAT  37 

farmers.  It  also  confesses  why  the  summer  price 
did  not  remain  low  all  winter  or  untO  such  time  as 
the  farmer  might  have  parted  with  the  bulk  of  his 
crop.     The  Bulletin  says: 

"During  the  first  quarter  of  the  year  the  stated 
prices  advanced  very  rapidly,  some  38  cents  per 
bushel,  and  held  to  the  advance  during  April  and  a 
part  of  May,  but  before  the  close  of  that  month 
nearly  30  cents  of  this  advance  was  lost.  .  .  .  The 
year's  range — top  prices  for  cash  wheat  in  April  and 
bottom  prices  in  August  and  September — shows  a 
range  of  68  cents,  $1.66  being  high  and  98  cents 
low.  .  .  .  The  high  prices  during  the  early  part  of 
the  year  were  the  result  of  very  heavy  exports  of 
wheat  from  the  United  States  to  European  coun- 
tries. .  .  .  Speculation  helped  to  force  the  prices 
upward.  Aided  by  bearish  operations,  prices  made 
the  remarkable  descent  from  the  top  to  the  low  prices. 
When  prices  reached  the  lower  level  an  active  export 
business  was  carried  on,  but  the  purchases  and  the 
business  were  carried  on  in  such  a  manner  that  prices 
did  not  respond  so  liberally  as  during  the  year.  .  .  . 
Some  reaction  followed  from  the  low  prices,  due 
partly  to  this  export  buying,  but  more  particularly 
to  the  disappointing  movement  from  the  interior, 
farmers  generally  having  held  back  their  wheat  for 
higher  prices." 

In  other  words,  the  speculators  had  gotten  the 
1914  crop  away  from  the  farmers  at  a  low  figure 
and  then  put  up  the  price  38  cents  for  their  own 
benefit.  They  had  then  sold  out  to  Europe  at  high 
prices  and,  having  cleaned  out  the  1914  crop,  they 


38  THE  HIGH  COST  OF  LIVING 

manipulated  the  market,  bearing  it  down  68  cents 
in  order  to  get  the  1915  crop  cheap.  Having  gath- 
ered in  the  first  4,000,000  bushels  of  the  1915  crop, 
they  again  started  an  active  export  business,  but 
so  manipulated  the  market  that  the  farmer  for  a 
time  got  no  benefit  whatever  out  of  it.  Then 
came  the  rise  in  prices  in  the  fall,  because  at  last 
the  farmer  had  seen  into  the  game  and  held  back 
his  wheat — a  most  disappointing  circumstance  to  the 
monopoly. 

The  lowest  fair  price  to  the  farmer  would  have 
been  the  average  between  the  spring  level  of  $1.66 
and  the  January  level  of  $1.38,  which  is  $1.52. 
Taking  this  as  a  basis,  we  can  calculate  the  amount 
taken  by  the  grain  speculators  for  each  month  dur- 
ing the  period  under  consideration.  In  September 
84,000,000  bushels  were  sold,  the  mean  average 
market  price  being  $1.07,  or  45  cents  below  the  fair 
level.  This  would  give  $37,800,000  as  the  amount 
unjustly  taken  by  the  monopoly  during  one  par- 
ticular month. 

The  second  method  of  exploitation  by  the  grain 
interests  is  the  loss  from  the  manipulation  of  export 
prices.  This  is  calculated  by  the  difference  between 
the  price  at  a  given  American  port  and  the  average 
Liverpool  price  of  the  following  month  (allowing  one 
month  for  passage),  less  legitimate  handHng  costs. 
Wheat  contracted  for  in  Duluth  in  July  was  de- 
livered a  month  later  in  England  at  an  advance  of 


GAMBLING  IN  WHEAT  39 

57  cents.  The  advance  on  wheat  contracted  for 
in  August,  September,  October,  November,  and 
December  were,  respectively,  63,  74,  71,  77,  and  79 
cents.  The  cost  of  handling  between  Duluth  and 
Liverpool  before  the  war,  allowing  for  "legitimate" 
profits,  was  7  cents.  For  legitimate  costs  of  han- 
dling during  the  war.  Congressman  J.  E.  Kelley,  of 
South  Dakota,  reckons  17  cents,  including  emergency 
and  double  freight-rate  costs.  On  this  basis  the  ex- 
port loss  during  the  six  months  totalled  $65,722,- 
226.  Not  all  of  this  vast  sum  went  to  the  ownei-s 
of  ships.  Ocean  freights  were  enormous,  it  is  tme, 
and  varied  greatly,  but  30  cents  a  bushel  to  Bristol 
Channel  from  July  to  November  and  35  cents  for 
December  would  probably  be  a  fair  average.  On 
this  basis  the  freight  manipulation  would  be  about 
$37,000,000  and  the  amount  gathered  in  by  the 
grain  monopoly  through  export  speculation,  over 
and  above  their  other  profits,  about  $28,000,000. 

The  third  abuse  is  that  effected  by  fraudulent 
practices  between  the  farm  and  the  terminal  market. 
These,  though  smallest  in  actual  losses,  come  closest 
home  to  the  farmer.  Under  this  class  of  exploita- 
tion comes  the  undergrading,  short-weighing,  over- 
docking,  and  price-gouging.  The  losses  to  the  farmer 
from  these  causes  amount  to  from  15  to  25  cents 
on  every  bushel  sold  by  him,  according  to  the  esti- 
mate, in  the  form  of  a  resolution,  of  a  large  conven- 
tion of  farmers  in  St.   Paul.    Even  at  the  con- 


40  THE  HIGH  COST  OF  LIVING 

servative  estimate  of  12  cents,  the  loss  amounted 
to  over  $55,000,000  on  the  468,000,000  bushels  sold 
between  July,  1915,  and  January,  1916.  It  has  been 
stated  by  Senator  A.  J.  Gronna,  of  North  Dakota, 
that  as  a  result  of  unfair  grading  the  farmers  of  the 
Western  States  received  only  50  per  cent,  of  the 
actual  value  of  light-weight  wheat.  This  is  brought 
about  by  the  system  of  grading  wheat  imposed  on 
the  farmers  by  the  grain  exchanges  and  millers,  un- 
der which  the  farmers  are  compelled  to  sell.  Yet 
the  consumers  paid  for  the  same  wheat  at  its  un  dis- 
counted value.  The  difference  went  to  the  middle- 
men. 

Senator  McCumber  stated  on  the  floor  of  the 
United  States  Senate  May  1,  1914,  that  the  unfair 
and  fraudulent  grading  of  grain  cost  the  farmers  of 
the  West  and  Northwest  $70,000,000  a  year. 

There  is  a  submarine  zone  about  the  Western 
farmer  which  costs  our  people  hundreds  of  millions 
annually.  This  submarine  zone  is  in  all  respects 
like  the  zone  which  surrounds  the  cattle-raiser,  the 
egg  and  poultry  man,  the  truckman,  and  the  dairy- 
man of  the  Eastern  cities.  Only  the  toll  is  not  taken 
by  one  submarine ;  it  is  taken  by  many,  each  one  of 
which  fixes  for  its  own  profit  the  terms  on  which 
the  farmer  shall  be  permitted  to  five.  And  these 
manipulators  work  in  harmon3^  Their  activities  are 
so  interlocked  that  the  concern  of  one  is  the  concern 
of  all.    And  they  create  an  inland  embargo  on  food- 


GAMBLING  IN  WHEAT  41 

stuffs,  which  they  only  permit  to  pass  to  market 
after  their  terms  are  compHed  with.  These  agencies 
include  the  railroads,  the  warehouses,  the  terminals, 
the  slaughter-houses,  and  the  banks.  They  all  work 
together  through  the  Boards  of  Trade.  They  fix  the 
price  which  the  farmer  receives  and  the  price  which 
the  consumer  pays.  In  1915  we  produced  1,100,000,- 
000  bushels  of  wheat.  At  40  cents  on  the  bushel 
the  consumers  paid  $440,000,000  in  speculative 
prices  to  the  grain  gamblers.  In  the  same  year  we 
produced  3,000,000,000  bushels  of  corn,  more  than 
1,500,000,000  bushels  of  oats,  and  more  than  800,- 
000,000  bushels  of  rye.  This  was  the  total  for  the 
entire  country.  And  if  the  manipulation  in  wheat 
is  indicative  of  the  gambling  tribute  on  other  prod- 
ucts, the  loss  to  the  farmers,  or  excess  sum  paid 
by  the  consumers,  must  have  amounted  to  more 
than  a  billion  dollars. 

In  hearings  before  the  Conmiittee  on  Rules  of  the 
House  of  Representatives  during  the  63d  Congress, 
witnesses  for  the  farmers  and  grain-growers  of  the 
Northwest  laid  before  the  committee  how  agricul- 
ture, and  especially  wheat-growing,  was  being  de- 
stroyed by  the  practice  at  the  Boards  of  Trade  and 
Chambers  of  Commerce  working  in  harmony  with 
the  warehouses,  the  millers,  bankers,  and  other 
agencies.  The  testimony  showed  that  the  Minneap- 
olis Chamber  of  Commerce  is  a  private  and  secret 
organization  like  a  club.    It  is  managed  by  a  small 


42  THE  HIGH  COST  OF  LIVING 

group  of  men  closely  identified  through  interlocking 
directors  with  the  banks,  railroads,  and  public  utility 
corporations.  A  large  number  of  the  seats  in  the 
Chamber  are  owned  by  the  banks  of  Minneapolis,  the 
railroads,  public  service  coiporations,  and  other  privi- 
leged interests.  Yet  the  producers  of  grain  are  not 
admitted  at  all.  It  is  impossible  for  the  farmers  or 
even  the  co-operative  grain-growers'  associations  to 
be  admitted  to  membership  in  the  Chamber  even  if 
they  succeed  in  buying  a  seat.  The  Minnesota 
Farmers'  Exchange  was  excluded  after  it  had  ac- 
quired a  membership  at  a  cost  of  $4,200. 

The  Minneapolis  Chamber  of  Commerce  emploj^s 
four  hundred  solicitors  who  travel  throughout  the 
Northwest  discrediting  the  farmers'  organization, 
and  every^  effort  on  their  part  to  organize  or  protect 
themselves.  The  banks  are  apparently  the  most 
powerful  members  of  the  organization  and  they,  in 
turn,  exercise  power  over  country  banks  which  make 
loans  to  the  farmers  and  co-operative  elevators. 
The  majority  of  the  directorate  in  thirty  years  has 
always  been  in  the  hands  of  the  big  millers  and  ele- 
vator men,  who  buy  the  gi-ain  and  whose  interest 
it  is  to  keep  down  the  price.  Competition  is  de- 
stroyed by  every  possible  means.  It  is  a  rule  of  the 
Chamber,  rigidly  enforced,  that  there  shall  be  no 
competitive  buying  whatever  between  the  members 
bidding  for  grain  on  the  track  for  shipment  to  Min- 
neapolis.   In  addition,  the  price  which  is  offered  the 


/ 


GAMBLING  IN  WHEAT  43 

farmer  is  always  the  closing  price  of  the  Chamber. 
That  is  the  price  paid  the  farmer  no  matter  how  much 
it  may  have  been  artificially  fixed  by  speculation. 
The  farmers,  no  matter  what  demand  or  supply 
may  be,  are  at  the  mercy  of  the  only  market  which 
they  have,  which  is  controlled  by  the  grain-pit, 
which  in  turn  is  controlled  by  the  milling  companies 
and  elevator  companies  which  are  the  buyers.  The 
largest  commission  houses  thi-ough  which  the  farmers 
sell  are  owned  by  the  milling  and  elevator  interests. 
The  farmers'  and  other  co-operative  organizations 
are  financed  by  the  banks  connected  with  the  Cham- 
ber of  Commerce,  and  they  require  the  farmers,  as  a 
condition  of  the  loan,  to  ship  their  grain  to  the 
houses  which  lend  them  money.  The  farmers  are 
thus  coerced  into  selling  to  the  grain  monopoly. 
Speakmg  of  this  condition,  Mr.  Benjamin  Drake, 
representing  the  farmers,  said:  "It  is  a  system  of 
financial  slavery.  This  system  of  loaning  has  been 
used  all  the  time  to  compel  shippers  to  give  their 
consent  to  the  arrangement  that  the  cormnission 
house  may  sell  to  the  subsidiaries."  Mr.  Drake 
further  testified  that  it  required  sales  in  futures 
amounting  to  an  aggregate  of  $4,800,000,000  a  year 
just  to  pay  the  expenses  of  the  organization  which 
controlled  the  clearances.  This  was  the  trading  of 
but  thirty-seven  members  of  the  Chamber  of  Com- 
merce alone.  The  whole  amount  of  future  trans- 
actions by  the  members  of  the  Chamber,  he  said, 


44  THE  HIGH  COST  OF  LIVING 

might  not  be  less  than  ten  bilUons  a  year.  "  In  other 
words,  for  a  bushel  of  real  wheat  sold/'  said  Mr. 
Drake,  "more  than  fifty  bushels  of  phantom  wheat 
is  sold  on  the  floor  of  the  Chamber  of  Commerce. 
And  every  bushel  of  future  grain  which  is  sold  tends 
to  make  the  price  received  for  cash  wheat."* 

No  person  in  the  country  has  given  more  scientific 
thought  to  the  questions  of  wheat  manipulation 
than  Professor  E.  F.  Ladd,  president  of  the  North 
Dakota  Agricultural  College.  He  has  fought  for 
the  farmers  of  his  State  for  years.  He  has  appeared 
before  the  State  legislature,  before  Congress,  and  in 
the  courts.  He  has  published  many  learned  bulle- 
tins on  the  subject.  Speaking  of  the  food  situation 
of  the  country  in  May,  1917,  he  says: 

"There  is  no  question  in  my  mind  but  what  the 
farmere  would  handle  the  situation  were  it  not  for 
those  who  are  endeavoring  to  exploit  them.  The 
exploitation  of  food  products  is,  to  my  mind,  one  of 
the  greatest  curses  of  our  day,  and  the  buying  and 
selling  of  grain  as  carried  on  at  the  Chamber  of 
Commerce,  etc.,  is  one  of  the  most  detestable  forms 
of  gambling  practised  by  certain  American  people  to 
the  detriment  of  the  great  producing  and  consuming 
classes  of  our  country. 

"If  the  farmer  received  on  the  average  of  $1.30 
for  his  wheat  for  the  past  year's  crop  (and  much  of 
it  was  sold  for  less  than  that),  then  is  there  any  good 

^  Testimony  Hearing,  Committee  on  Rules,  House  of  Representa- 
tives, 63d  Congress,  Second  Session,  Grain  Exchange  House  reso- 
lution No.  424. 


GAMBLING   IN  WHEAT  45 

reason  why  that  wheat  should  sell  in  the  same  mar- 
ket to-day  for  $3.00  and  better  per  bushel,  except 
through  exploitation  on  the  part  of  a  few  food  gam- 
blers?" 


CHAPTER  V 
THE  PACKERS  AND  THE  CATTLEMEN 

The  cattlemen  of  the  West  and  Southwest  assert 
that  the  meat  supply  is  controlled  by  the  packing 
monopoly,  just  as  the  wheat  of  the  Northwest  is  con- 
trolled by  speculators  and  middlemen.  They,  too, 
are  in  the  power  of  speculators  which  fix  the  price 
paid  the  producer  and  the  price  paid  by  the  con- 
sumer as  well.  The  cattlemen  produce  for  the 
world  market,  but  they  do  not  sell  to  their  custom- 
ers. They  sell  to  the  buyers  of  five  or  six  packing- 
houses, who  arbitrarily  fix  the  price  of  meat  on  the 
hoof.  The  cattlemen  have  to  accept  what  is  offered 
or  ship  their  cattle  back  to  the  range.  They,  too, 
have  no  real  control  over  their  business  and  no 
means  of  being  assured  from  one  year  to  the  other 
that  they  will  receive  enough  for  their  cattle  to  pay 
for  the  cost. 

The  cattle-raisers  have  finally  organized  for  pro- 
tection just  as  have  the  farmers.  They  have  held 
conferences,  employed  counsel,  and  laid  their  condi- 
tion before  Congress.  They  insist  that  they  do  not 
fix  the  price  of  meat,  but  they  frequently  receive 
so  little  that  it  does  not  pay  for  the  raising.  Numer- 
ous investigations  have  been  made,  one  of  them  pre- 

46 


THE  PACKERS  AND  THE  CATTLEMEN  47 

sented  as  an  exhibit  before  the  Interstate  Com- 
merce Conmiission  in  a  rate-case  hearing  during  the 
winter  of  1914-15.  The  year  1915,  despite  the  Eu- 
ropean war  and  the  high  prices  prevaiKng,  is  said 
by  the  cattlemen  to  be  one  of  the  most  disastrous 
in  their  history,  and  the  statement  presented  to  the 
Interstate  Conmierce  Commission,  and  sworn  to  by 
the  farmers  from  whose  accounts  it  was  taken, 
seems  to  substantiate  their  claims.  The  investiga- 
tion covered  56  Iowa  farmers  who  had  marketed 
2,025  cattle  between  them,  or  an  average  of  36  head 
per  farmer.  Of  the  total  56  feeders  all  but  3  lost 
money,  and  the  latter  made  a  profit  of  only  $667.78 
on  the  sale  of  137  cattle.  The  other  53  lost  on  an 
average  of  $19.32  per  head  on  their  operations. 
And  the  expense  of  labor  and  care  was  not  included 
in  the  cost.  It  was  stated  that  these  cases  were 
typical  of  the  industry. 

The  exhibit  was  for  the  year  1915.  Yet,  while 
this  was  one  of  the  most  disastrous  years  in  the  his- 
tory of  stock-raising,  it  was  a  most  profitable  one  for 
the  packers,  who  made  the  largest  profits  in  their 
history. 

A  committee  of  the  American  National  Live  Stock 
Association  was  created  for  the  puipose  of  securing 
some  sort  of  relief.  The  committee  prepared  a 
comprehensive  report  on  the  subject,  which  showed 
that  it  cost  to  raise  and  feed  steers  for  market  (in 
the  Panhandle  of  Texas)  $S.10  per  100  pounds,  while 


48  THE  HIGH  COST  OF  LIVING 

the  price  paid  for  cattle  by  the  packers  during  the 
primary  market  season  had  ranged  from  $7.50  to 
$8.05  per  100  pounds.  They  asserted  that  the 
prices  paid  are  so  manipulated  that  the  prices  are 
very  low  during  the  months  when  they  have  to  sell 
their  cattle,  while  during  the  months  when  the  pack- 
ers realize  on  their  sales  the  prices  are  artificially 
high. 

The  cattle-raisers  ship  in  their  cattle  from  the 
ranges  to  the  stock-yards  of  the  various  cities  where 
the  packing-houses  are  located.  Each  morning  the 
price  of  cattle  on  the  hoof  is  fixed  by  the  buyers  for 
the  various  establishments,  who  meet  for  the  purpose. 
This  the  cattlemen  can  accept  or  reject.  But  the 
only  other  market  is  in  a  distant  city  and  it,  too,  is 
under  the  same  ownership.  So  the  cattleman  has 
to  sell  at  the  price  which  is  offered  or  take  his  cattle 
back  home.  This  in  many  cases  he  cannot  do,  for 
he  has  borrowed  money  from  the  bank  to  feed  and 
market  his  stock. 

The  stock-raisers  attribute  their  helplessness  to 
the  control  of  the  cattle  business  by  the  four  or  five 
companies  which  dominate  the  business.  For  there 
are  no  public  slaughter-houses  and  there  is  no  com- 
petition among  buyers.  The  packers  fix  the  price 
paid  the  producer  at  one  end  of  the  transaction  and 
the  price  charged  the  consumer  at  the  other.  They 
manipulate  and  control  prices  at  will.  The  killing 
and  packing  of  cattle  is  centred  in  Chicago,  Kansas 


THE  PACKERS  AND  THE  CATTLEMEN     49 

City,  Omaha,  St.  Louis,  Fort  Worth,  and  St.  Joseph, 
Mo.,  which  are  the  centres  to  which  almost  all  of 
the  live  meat  is  shipped.  But  the  packing  mo- 
nopoly extends  far  beyond  the  mere  buying  and 
selling  of  meat  products.  It  includes  the  ownership 
of  the  stock-yards,  refrigerator-cars,  oil-mills,  and 
many  banks,  all  of  which  work  in  harmony  and 
under  the  control  of  the  packers.  The  packers  also 
control  the  hide  business,  tanneries,  and  the  produce 
of  tanneries,  as  well  as  glue,  button-making,  cotton- 
seed-oil, soap,  artificial  butter,  etc.  The  combina- 
tion controls  the  price  of  the  fertilizer  which  the 
farmer  uses  as  well  as  the  refrigerator-cars  for  the 
transportation  not  only  of  meat  but  of  fruits,  fresh 
vegetables,  and  other  perishable  products.  In  fact, 
the  meat-packers,  through  their  control  of  banks  and 
railroad- cars  and  the  virtual  ownership  of  the  means 
of  marketing,  possess  a  more  or  less  complete  mo- 
nopoly of  the  foodstuffs  of  the  entire  nation.  This 
monopoly  is  made  complete  by  the  ownership  of 
local  cold-storage  plants  in  all  of  the  large  cities. 
Local  butchers  can  only  buy  of  the  trust  because 
local  slaughter-houses  have  been  driven  out  of  busi- 
ness. The  supply  of  meat  is  thus  under  the  control 
of  the  four  or  five  big  packing  establishments  from 
the  time  the  cattle  are  brought  to  the  stock-yards 
until  the  meat  reaches  the  consumer. 

One  of  the  reasons  for  the  incredible  power  of  the 
great  packers  is  that  they  have  at  their  command  the 


50  THE  HIGH  COST  OF  LIVING 

banking  capital  not  only  of  Chicago  but  of  other 
financial  centres  of  the  West.  They  are  members 
of  the  directorate  or  are  represented  in  practically 
every  bank  of  importance  in  Chicago.  When  the 
packers  are  buying  the  banks  are  eager  purchasers 
of  cattle  paper.  The  discount  rate  is  |  per  cent, 
to  1|  per  cent,  above  that  on  other  gilt-edged  com- 
mercial paper.  Each  morning  the  telegraph  an- 
nounces the  prices  Chicago  is  wiUing  to  pay  for  each 
quahty  of  stock  delivered  on  the  track.  The  pack- 
ers pay  cash  and  the  farmer  is  so  weak  financially 
that  he  cannot  resist;  for  the  banks  which  accom- 
modate the  cattlemen  are  controlled  by  the  packers 
and  see  to  it  that  the  cattlemen  sell  when  the  pack- 
ers desire.  The  cattle-raiser  has  borrowed  money 
from  his  bank  to  raise  his  stock.  The  banks  in 
turn  are  closely  allied  with  the  packers  or  are  owned 
by  them.  And  the  banks  cariying  the  cattleman's 
paper  bring  pressure  on  him  to  sell,  ofttimes  in  the 
season  of  the  year  when  the  price  has  been  artifi- 
cially lowered  by  the  packers.  The  procedure  is  the 
same  as  in  the  case  of  wheat.  The  packers  fix  a 
low  price  when  the  cattleman  has  to  sell  and  then 
bring  pressure  upon  him  through  the  banks  which 
they  control  to  compel  him  to  sell  on  the  packers' 
terms. 

Thus  the  packing  establishments  rather  than  the 
producers  control  the  price  of  meat.  And  they  seem 
to  establish  the  price  at  the  point  which  will  just 


THE  PACKERS  AND  THE  CATTLEMEN  51 

keep  the  industry  alive.  Frequently  they  reduce  it 
below  the  production  cost.  This  discourages  cattle- 
raising  and  creates  a  scarcity  in  subsequent  years. 
Then  the  price  is  raised  again  and  the  producers 
take  heart  and  increase  their  output.^ 

The  packers  also  control  the  cold-storage  plants, 
the  grain  warehouses,  and  the  refrigerator-cars, 
which  are  important  links  in  the  system.  This  en- 
ables the  packers  to  destroy  any  independent  com- 
petitor; for  he  is  obliged  to  come  to  them  for  cars. 
And  the  refrigerator-car  companies  are  in  close  aUi- 
ance  with  the  railroads  through  interlocking  direc- 
torates. The  cold-storage-car  monopoly  enables  the 
packers  to  exact  tribute  from  the  small  shipper  and 
makes  him  dependent  upon  their  will. 

The  cattlemen  are  coming  to  see  that  their  only 
hope  of  relief  is  through  political  action.  They,  too, 
have  come  to  realize  that  the  abuses  under  which 
they  suffer  are  inherent  in  the  private  ownership  of 
the  stock-yards  and  packing-houses.  And  they  have 
recommended  that  public  abattoirs  be  established, 
similar  to  those  in  other  countries,  to  which  they  can 
bring  their  cattle  and  sell  them,  not  to  a  single 
buyer  but  in  the  open  market.  Every  nation  in 
the  world,  with  the  exception  of  the  United  States 

^  This  is  one  of  the  main  reasons  for  the  falling  off  in  cattle-raising. 
We  pay  enough  for  meat  at  retail,  and  there  is  land  enough  all  over 
the  country  that  could  be  used  for  raising  cattle,  yet  the  meat  pro- 
duced in  1909  was  only  a  little  over  that  of  1899,  while  the  per  capita 
production  for  the  country  has  fallen  from  248  in  1899  to  219  in 
1915. 


52  THE  HIGH  COST  OF  I.TVING 

and  England,  has  public  abattoirs.  We  have  left 
this  industry,  like  distribution,  in  private  hands. 
And  the  cattlemen,  like  the  wheat-growers  of  the 
Northwest,  have  come  to  believe  that  the  only  way 
out  of  the  uncertainties  and  exploitation  under 
which  they  suffer  is  through  government-owned 
terminals  and  packing-houses.^ 

Here  again  we  find  the  middlemen  destro)dng  an 
industiy.  They  first  discourage  the  raising  of  cat- 
tle, sheep,  and  hogs  in  the  East  by  the  monopoly  of 
slaughtering,  and  then,  having  subjected  the  indus- 
try to  their  control,  they  create  such  uncertainty  and 
pay  such  low  prices  that  they  discourage  the  indus- 
trj'^  in  the  West  as  well.  The  meat  supply,  like  wheat 
and  other  staple  foods,  is  now  not  controlled  b}^  the 
producer;  it  is  controlled  by  the  middleman.  And 
he  has  put  an  end  to  the  operation  of  the  law  of  de- 
mand and  supply  by  destroying  all  competition. 

*  Later  chapters  containing  a  description  of  the  public-owned  abat- 
toirs of  Australia,  Germany,  and  Denmark  show  the  effect  of  public 
ownership  in  this  field.  It  frees  the  producer  from  monopoly,  on 
the  one  hand,  and  the  consumer  on  the  other.  See  especially  the 
various  measures  provided  by  the  several  AustraUan  statea  for 
selling  meat  products  and  bringing  them  to  market. 


/ 


CHAPTER  VI 
COLD  STORAGE  AND  FOOD  SPECULATION 


\ 


The  cold-storage  warehouse  and  the  refrigerator- 
car  are  among  the  greatest  devices  of  our  age.  With- 
out these  agencies  our  city  population  would  be  de- 
pendent upon  the  immediate  local  supply,  while 
foods  of  distant  lands  would  be  unknown  to  most  of 
us.  They  place  the  perishable  food  of  every  clime 
upon  our  tables  all  the  year  around.  Even  the 
poorest  dines  on  foods  that  were  unknown  to  the 
richest  a  century  ago.  The  cold-storage  warehouse 
also  tends  to  equahze  prices  throughout  the  year. 
Eggs,  butter,  poultr}^,  fish,  and  meat  lose  but  little 
in  freshness  from  months  of  storage,  while  seasonal 
products  can  be  kept  at  a  uniform  price  by  reason 
of  these  facilities. 

Yet,  instead  of  being  an  agency  of  universal  ser- 
vice and  a  means  of  cheapening  the  price  of  food, 
cold  storage  is  one  of  the  principal  agencies  of  the 
speculator.  The  cold-storage  plant  is  a  warehouse. 
It  offers  easy  facilities  for  a  few  men  to  buy  up  and 
store  foods  and  thus  control  the  market.  The 
operators  and  owners  are  in  close  alliance  with  the 
food  exchanges,  which  fix  quotations,  and  with  the 
packers,  produce  men,  and  jobbers  in  every  large 
city.    There  are  seventy-five  of  these  cold-storage 

53 


54  THE  HIGH  COST  OF  LIVING 

warehouses  in  and  about  New  York.  They  control 
the  bulk  of  the  city's  perishable  food  supply,  in- 
cluding fish  and  meat.  There  are  forty-eight  such 
plants  in  Chicago,  the  food  centre  of  the  country. 
Many  of  these  cold-storage  warehouses  work  in 
co-operation  with  or  are  owned  by  the  refrigerator- 
car  companies,  which  are  owned  in  turn  by  the  big 
packers  of  Chicago  and  the  West.  Here  again  is 
the  combination  of  transportation,  terminals,  banks, 
and  food  exchanges,  which  fix  the  price  to  the  pro- 
ducer at  one  season  of  the  year  and  to  the  consumer 
all  the  year  around. 

The  food  exchanges  speculate  in  prices  of  perish- 
able food  just  as  they  do  in  wheat.  The  egg  supply 
of  the  countiy,  for  instance,  is  controlled  by  the 
Elgin  Board  of  Trade,  the  Butter  and  Egg  board, 
and  the  Board  of  Trade  of  Chicago,  which  are  price- 
fixing  agencies.  They  estabhsh  prices  day  by  day 
for  eggs,  butter,  poultry,  and  other  produce  by  sales 
between  the  members.  They  use  the  same  methods 
described  in  previous  chapters  as  to  wheat  and 
cattle.  The  price  of  eggs  for  April  delivery  is  fixed 
by  the  speculators  the  previous  November.  Having 
fixed  the  price,  the  agents  of  the  speculators  travel 
about  and  make  contracts  all  over  the  country  for 
deliveiy  by  the  farmer  in  Chicago  the  following 
spring.  Having  purchased  and  stored  the  eggs, 
they  control  the  available  supply.  Day  by  day  the 
speculators  make  the  market  quotation  just  as  they 


COLD  STORAGE  AND  FOOD  SPECULATION  55 

do  the  price  of  securities  on  the  New  York  Stock 
Exchange.  These  prices  are  flashed  all  over  the 
country  and  establish  the  prices  even  in  the  small 
town  or  summer  resort. 

An  investigation  of  egg  speculation  in  Chicago 
showed  that  one  dealer  and  his  associates  held  43,- 
200,000  eggs  in  storage  at  the  end  of  1916.  He 
made  no  secret  of  the  fact  that  he  was  holding 
them  for  50  cents  a  dozen,  which  meant  that  they 
would  sell  at  55  cents  retail.  He  even  threatened 
to  sue  the  aldermen  and  club  women  of  Chicago  for 
conspiracy  when  they  threatened  to  fight  his  mo- 
nopoly. These  same  eggs  were  acquired  at  19|  to 
20  cents  a  dozen  in  November  and  delivered  in 
Chicago  and  elsewhere  the  following  April  and  May. 
During  this  period  eggs  had  reached  a  very  high 
price.  The  egg  speculators  claimed  that  it  was  due 
to  scarcity.  Yet  their  own  figures  showed  that  there 
were  3,686,533  cases  in  1915  and  2,794,295  cases  in 
1916  in  Chicago  and  other  centres.  Despite  these 
hoardings  the  price  of  eggs  advanced  approximately 
100  per  cent,  since  they  were  bought  for  April  de- 
livery. One  of  the  egg  operators  is  said  to  have 
made  a  million  dollars  profits  in  a  single  year  and 
retired  from  business.  While  speculation  doubled 
the  price  of  eggs,  the  cost  of  storage  for  ten  months 
is  only  about  2  cents.  Allowing  .5  cents  for  the 
retailer,  the  price  of  eggs  during  the  winter  months 
ought  not  to  exceed  30  cents  a  dozen  at  the  outside. 


56  THE  HIGH  COST  OF  LIVING 

In  the  spring  of  1917  speculation  went  wild  not 
only  in  eggs  but  in  other  produce.  Prices  advanced 
to  exorbitant  figures.  An  investigation  made  by 
the  government  showed  that  eggs  had  gone  through 
fifteen  or  sixteen  middlemen's  hands  in  reaching  a 
market,  each  one  of  whom  took  off  a  profit.  Yet, 
while  we  were  paying  50  to  75  cents  per  dozen  for 
eggs,  the  people  of  England,  after  two  and  a  half 
years  of  war,  were  buying  the  same  eggs  at  from  32 
to  35  cents  a  dozen.  In  England  food  speculation 
is  prohibited. 

The  prices  established  in  the  Chicago  Butter  and 
Egg  board  do  not  represent  buying  and  selling  of 
actual  eggs;  they  represent  fictitious  sales  in  "paper 
eggs"  for  the  purpose  of  sending  the  market  up  or 
down,  as  the  speculators  desire.  Yet  these  sales  of 
eggs  that  do  not  exist  fix  the  price  of  eggs  to  all 
buyers  throughout  the  United  States.  As  a  result  of 
an  investigation  in  Chicago  it  was  said  that  4,000 
car-loads  of  eggs  that  never  existed  were  traded  in 
by  members  of  the  Butter  and  Egg  board.  And  each 
time  the  eggs  were  traded  in  the  price  was  elevated 
from  I  cent  to  1  cent  per  dozen.  By  these  means 
eggs  which  should  have  sold  for  approximately  22 
cents,  if  the  price  had  been  fixed  by  legitimate  sup- 
ply and  demand,  were  selling  at  from  34  to  35  cents 
a  dozen  in  Chicago.  The  speculators  took  excess 
profits  of  $6,000,000  on  the  Easter  trade  alone  in  the 
United  States. 


COLD  STORAGE  AND  FOOD  SPECULATION     57 

These  manipulations  of  eggs,  butter,  and  other 
foodstuffs  would  be  impossible  without  the  co-opera- 
tion of  the  Chicago  banks,  which  are  an  integral  part 
of  the  system.  The  egg  speculator  is  permitted 
by  the  banks  to  borrow  money  on  his  warehouse 
receipts  on  a  valuation  of  only  $L50  a  case  below 
the  prevailing  market  quotations,  which  are  almost 
always  from  50  to  100  per  cent,  more  than  the  price 
originally  paid  for  the  eggs.  In  other  words,  the 
speculator  borrows  on  a  valuation  which  he  himself 
fixes  rather  than  the  price  which  he  paid.  This 
gives  the  dealer  a  big  line  of  credit  which  he  can 
use  to  buy  more  eggs,  upon  which  he  then  borrows 
money  at  a  fictitious  valuation  and  uses  the  proceeds 
of  his  loan  to  buy  other  eggs.  The  co-operation  of 
the  banks  makes  it  possible  for  the  speculator  to 
pyramid  his  holdings  during  the  storing  season  and 
greatly  to  enlarge  the  scope  of  his  operations  and 
still  further  monopolize  the  market. 

The  attitude  of  the  egg  speculators  toward  the 
public  has  been  arrogant  in  the  extreme.  Judge 
Landis,  of  Chicago,  issued  an  injunction  against 
market  rigging  and  forbade  any  but  bona-fide  sales. 
The  officers  of  the  egg  board  met  and  worked  out 
a  plan  by  which  they  could  continue  their  specula- 
tions but  accompany  each  sale  with  bills,  car  num- 
bers, and  entries  on  their  books,  just  as  though  an 
actual  transaction  had  taken  place.  The  attitude 
of  the  speculators  toward  the  public  is  expressed  in 


58  THE  HIGH  COST  OF  LIVING 

the  words  of  one  of  the  speculators,  who  said:  "Call 
it  speculation  if  you  will.  It  is,  possibly,  from  the 
standpoint  of  the  gentle  public;  but  we  call  it  suc- 
cessful merchandising  in  South  Water  Street." 

The  same  practice  prevails  as  to  poultry,  butter, 
sugar,  and  many  other  commodities.  In  fact,  almost 
every  article  of  food  is  under  the  control  of  middle- 
men and  food  speculators. 

Mr.  Herbert  Hoover,  commenting  on  the  extent 
of  speculation  and  its  cost  to  the  public,  stated  in 
a  hearing,  June  19,  1917,  before  the  Senate  Com- 
mittee on  Agriculture  and  Forestry: 

"  In  our  commercial  distribution  we  are  confronted 
daily  and  hourly  with  evidence  of  a  large  amount 
of  rank  speculation  at  every  link  of  the  distribut- 
ing chain  by  persons  not  engaged  in  actual  com- 
merce of  distribution.  Thousands  of  men  in  this 
country  who  never  owned  a  commodity  in  their  life 
have  bought  canned  goods,  flour,  wheat,  and  every 
food  commodity  to  speculate  for  the  rise,  and  these 
speculations  have  been  prompted  to  a  great  degree 
by  the  increased  field  of  forward  contracts,  which 
offer  a  basis  for  transfer  of  titles  in  commodities  not 
much  speculated  in  hitherto.  Altogether  w^e  face 
the  amazing  situation  of  the  country  producing  a 
smplus  of  foodstuffs  and  paying  the  highest  prices 
known  to  its  histoiy. 

"There  can  be  no  more  vivid  evidence  of  the  de- 
sirability of  food  control  in  this  situation  than  a 
comparison  between  our  prices  and  the  prices  of 
foodstuffs  in  countries  where  there  is  some  measure 
of  food   administration.     I   will  not  traverse   the 


COLD  STORAGE  AND  FOOD  SPECULATION  59 

prices  of  all  commodities  more  than  to  say,  as  a 
general  fact,  the  average  prices  to  the  consumer  are 
lower  in  food-controlled  countries  than  in  the  United 
States.  Practically  the  entire  wheat  supply  to  Bel- 
gium is  to-day  imported  from  the  United  States, 
and,  despite  the  extraordinary  costs  of  transporta- 
tion, the  price  of  bread  is  60  per  cent,  of  the  price 
in  New  York  City.  A  large  portion  of  the  wheat 
in  France  comes  from  this  country,  and  yet  the  price 
of  bread  is,  again,  40  per  cent,  below  our  own.  In 
England,  where  food  control  was  started  too  late, 
the  price  is  30  per  cent,  below  our  price,  and  in 
Canada,  again,  we  see  a  lower  range  of  prices  to  the 
consumer  than  in  our  own  country,  although  the 
producer  realizes  the  same  price." 

Produce  exchanges,  similar  to  those  described  in 
Chicago,  exist  in  New  York  and  other  large  cities. 
The  quotations  which  they  make  are  directed  by  the 
distributers  and  are  largely  fictitious.  Judge  Jay- 
cox,  of  New  York,  called  their  daily  quotations  of 
prices  "untruthful,  wilful,  deliberate,  intentional, 
systematic,  and  fraudulent,"  as  a  result  of  an  in- 
quiry into  their  methods.  Honorable  John  J.  Dillon, 
Commissioner  of  Foods  and  Markets  of  New  York 
State,  says  of  the  food  exchanges  that  they  are 
"gambling  dens." 

According  to  the  State  food  experts,  New  York 
City  food  speculators  made  profits  of  $900,000  in  the 
week  preceding  November  18,  1916,  on  the  single 
item  of  eggs  alone.  The  toll  for  the  week  of  No- 
vember 18  was  estimated  by  the  State  officials  at 


60  THE  HIGH  COST  OF   LIVING 

$1,000,000,  with  the  prospect  of  a  still  higher  exten- 
sion the  following  week  unless  the  power  of  price- 
fixing  was  taken  out  of  the  hands  of  the  speculators. 

Control  of  cold-storage  plants  is  the  key  to  the 
food  situation,  say  food  ex-perts  of  New  York.  Be- 
cause of  private  control  speculators  corner  the  supply 
of  fresh  foods  and  charge  all  they  can  get.  At  the 
time  of  the  investigation  practically  all  the  available 
cold-storage  plants  in  Greater  New  York  and  Jersey 
City  were  filled  with  eggs  and  other  farm  produce, 
purchased  by  the  speculators  during  the  months 
when  prices  were  lowest.  Eggs  bought  at  17  cents 
to  19  cents  a  dozen,  says  Mr.  Dillon,  were  sold  on 
November  17  at  60  cents  to  70  cents  a  dozen, 
with  even  higher  prices  in  prospect.  The  city 
consumes  100,000  cases  of  eggs  so  stored  each 
week,  which  is  the  basis  on  which  the  profits  of  the 
speculators  were  calculated,  Mr.  Dillon  says:  "It 
costs  only  2  cents  a  dozen  for  holding  eggs  for  ten 
months.  On  that  basis  it  is  easy  to  see  just  how 
much  is  being  made  out  of  the  manipulation  of  egg 
prices  in  the  city.  I  estimate  that  the  citizens  of 
New  York  City  would  save  from  $7,000,000  to 
$10,000,000  annually  by  the  establishment  of  such 
[municipal]  cold-storage  plants." 

"The  present  cold-storage  facihties,"  says  Mr. 
Dillon,  "ai'e  not  sufficient  for  New  York  City.  In 
consequence,  a  large  part  of  the  storage  goods 
consumed  in  the  city  are  held  in  Chicago,  Buffalo, 


COLD  STORAGE  AND  FOOD  SPECULATION  61 

and  other  outlying  points.  The  facilities  for  han- 
dling supplies  are  grossly  inadequate.  The  dealers 
manipulate  what  there  are,  and  the  individual  grower 
is  in  a  position  where  he  must  sell  his  fruit  or  let  it 
waste  on  the  farm." 

Speaking  on  another  occasion  of  the  cold-storage 
facilities  of  New  York,  Commissioner  Dillon  said: 

"Our  cold-storage  faciHties  are  equally  inade- 
quate. Such  as  we  have  are  controlled  by  the 
speculators  in  foods.  Neither  the  producer  nor  the 
consumer  has  access  to  them,  with  the  result  that 
in  times  like  these  the  speculator  is  in  a  position 
to  exact  any  price  that  his  greed  may  dictate  for 
the  food  products  that  he  controls  through  his  mo- 
nopoly of  cold-storage  facilities. 

"At  least  $7,000,000  a  year  can  be  saved  in  the 
wholesale  handling  of  live  poultry  in  New  York 
City,  $10,000,000  on  eggs,  and  a  similar  amount  on 
dressed  poultiy.  Ten  milHon  dollars  can  be  saved 
on  the  distribution  of  butter,  and  besides  these  sav- 
ings in  the  necessaiy  cost  of  the  physical  handling 
of  these  products  at  the  present  time,  an  efficient 
system  of  marketing  would  save  the  people  mitold 
millions  in  the  speculative  prices  that  thej^  are  now 
pajdng.  In  the  one  item  of  milk  alone,  $15,000,000 
can  be  saved  to  the  people  in  the  distribution  of  it." 

In  its  search  for  reasons  for  the  high  price  of  milk 
and  the  sky-rocketing  advance  in  eggs,  the  Wicks 
legislative  committee  of  New  York  State  brought 
out  two  facts :  one,  that  the  New  York  Central  Rail- 
road paid  $25,000  a  3^ear  to  the  estate  of  Westcott, 


62  THE  HIGH  COST  OF  LIVING 

the  express  man,  for  the  "supervising"  of  milk 
shipments  to  New  York  from  the  districts  in  the 
northern  part  of  the  State,  and,  two,  that  a  car-load  of 
Indiana  eggs,  sold  by  the  Decatur  Produce  Com- 
pany the  preceding  June  (that  is,  June,  1916)  to  a 
New  York  wholesaler  at  24|  cents  a  dozen,  was  re- 
sold nine  or  ten  times  without  leaving  the  cold- 
storage  warehouse,  until  the  St.  Regis  Hotel  paid 
43  cents  a  dozen  for  part  of  the  lot  on  November 
18,  1917. 

While  the  price  of  sugar  was  mounting  in  1916 
great  quantities  of  this  commodity  were  held  in 
storage  warehouses.  On  October  4,  1916,  there  were 
427,185,758  pounds  so  held  in  raw  sugar  in  New 
York  alone.  The  stock  was  held  in  the  government 
warehouses  under  bond.  Refined  sugar  jumped 
from  $6.75  to  $7  per  hundred  pounds,  in  spite  of  the 
fact  that  Great  Britain  was  no  longer  so  large  a 
consumer  as  in  the  preceding  year.  The  1916  sugar 
crop  in  the  United  States  was  the  largest  in  its  his- 
tory. The  Porto  Rico  crop  was  also  larger  by  137,- 
000  tons  than  ever  before.  This  more  than  made 
up  for  the  loss  of  the  German  and  Austrian  supply. 
In  spite  of  the  unprecedentedly  large  crops,  the  1916 
range  of  prices  in  the  United  States  was  from  $4.51 
to  $6.52  for  96  per  cent,  centrifugal.  In  1915,  when 
England  bought  up  great  quantities,  the  range  was 
only  from  $3.64  to  $5.20.  Speculation  alone  is  the 
cause  for  the  prevailing  prices. 


COLD  STORAGE  AND  FOOD  SPECULATION  63 

The  cold-storage  evil  and  with  it  food  speculation 
can  be  corrected  by  the  public  ownership  of  the 
cold-storage  plants,  and  it  can  probably  be  corrected 
in  no  other  way.  Any  one  familiar  with  the  attempt 
to  regulate  the  prices  of  public-utility  corporations 
knows  how  futile  the  whole  proceeding  is.  So  satis- 
factory is  regulation  to  the  railroads  and  public- 
service  corporations  that  they  would  probably  fight 
as  hard  now  to  retain  the  public-service  commissions 
as  they  fought  to  prevent  their  creation.  They  are 
the  best  possible  guarantee  of  existing  rates  and 
charges.  The  difficulties  in  the  way  of  rate  regula- 
tion, even  when  the  utility  commissions  are  intelli- 
gent and  free  from  control,  are  so  insurmountable, 
and  the  contests  in  the  courts  are  so  costly  and  pro- 
longed, that  decisions  favorable  to  the  public  have 
ceased  to  be  expected.  And  the  regulation  of  food 
agencies  by  price  control,  etc.,  or  by  criminal  pro- 
ceedings is  so  vastly  more  difficult  than  the  regula- 
tion of  pubHc-utility  corporations,  where  responsible 
officials  can  be  found  and  the  property  is  in  sight, 
that  it  is  utterly  beyond  the  power  of  the  govern- 
ment successfully  to  attempt  it.  Other  countries 
more  courageous  or  less  controlled  by  these  interests 
than  we  recognize  the  unpracticability  of  private 
distributing  agencies  and  do  not  permit  them  in 
this  field.  In  Germany,  Denmark,  and  Australia, 
the  countries  where  the  food  supply  is  successfully 
controlled  in  the  public  interest,  the  cold-storage 


64  THE  HIGH  COST  OF   LIVING 

plants,  food  warehouses,  and  other  distributing 
agencies  are  owned  by  the  cities  or  the  state,  and  in 
consequence  monopoKes,  corners,  or  speculation  are 
either  difficult  or  impossible  to  maintain. 


CHAPTER  VII 
THE  MIDDLEMEN   AND   DISTRIBUTERS 

The  gambling  operations  and  the  arbitrary  con- 
trol of  prices  by  the  food  exchanges  of  Chicago  are 
repeated  again  when  food  reaches  other  cities  for 
distribution.  The  agencies  and  the  methods  em- 
ployed are  the  same,  only  the  city  embargo  is  on  a 
smaller  scale. 

No  one  knows  how  many  middlemen  there  are 
between  the  producer  and  the  consumer  in  a  city 
like  New  York.  Even  the  individual  middleman 
only  knows  the  groups  immediately  above,  below,  or 
around  him.  And  each  of  these  feels  that  he  has  a 
vested  right  in  his  business  that  should  not  be  in- 
terfered with  by  the  government.  He  resists  every 
attempt  to  dislodge  him  by  the  opening  of  municipal 
markets  or  by  the  regulation  of  prices.  Mr.  Dillon 
states  that  there  are  seven  or  eight  middlemen  be- 
tween the  farm  and  consumers  of  New  York  City, 
each  one  of  which  adds  from  5  to  10  per  cent,  to  the 
cost  of  the  food  which  he  handles.  vSome  of  these 
are  the  same  persons  operating  under  different  firm 
names.  All  but  one  or  two  of  these  middlemen 
could  be  dispensed  with  if  the  city  or  State  would 
open  a  central  market  and  provide  a  public  rep- 

65 


66 


THE  HIGH  COST  OF  LIVING 


resentative  to  whom  the  farmer  could  ship  and  to 
whom  the  retail  dealer  could  come  and  buy. 

These  middlemen  have  arbitrarily  crowded  them- 
selves into  the  field  and  between  them  take  from  50 
to  65  cents  out  of  every  dollar  paid  for  much  of 
the  food  of  the  metropolis.  The  waste  in  New  York 
City  alone  from  the  operations  of  these  agencies  is 
estimated  at  from  $150,000,000  to  $200,000,000  a 
year.^ 

Commissioner  Dillon  says  that  the  farmers  would 
produce  food  enough  if  they  were  given  an  oppor- 
tunity to  sell  on  profitable  terms.    But  they  cannot 


*  Second  Anrmal  Report  of  the  Department  0/  Foods  and  Markets, 
February,  1916. 

An  investigation  made  by  Miss  Laura  A.  Cauble  as  to  the  increase 
in  the  cost  of  vegetables,  fresh  fruits,  and  fish  on  July  11,  1917, 
while  the  protest  against  the  high  cost  of  living  and  the  Lever  bill 
were  before  Congress  for  consideration,  disclosed  the  following 
facts  as  to  the  wholesale  and  retail  prices  in  the  city  of  New 
York: 


Wholesale 

(Dept.  of  Health 

data,  July  11.  1917) 

Retail 

Percentage 
of  Increase 
TO  Consumer 

Vegetables 

(Abundant 

supply  in 

market) 

Potatoes 

Tomatoes.. . . 

Spinach 

Lettuce 

Fish 
Blue 

$3.25  per  bbl.   (160 

lbs.) 

10  cents  qt 

15  cents  lb 

25  cents  qt 

10-15  cents  head 

22-28  cents  lb. . . 
14-20     "     "     .  . 
18-25     "     "     .  . 
12-16     •'     ••     . . 
12-16     "      "      .  . 

264% 

689% 
1200-1500% 
1900-2900% 

715% 
186% 
259% 
433% 
700% 

50  cents-75  cents  per 

crate  (35  lbs.) 

75  cents  per  bbl 

100  heads  at  50  cents. 

13  cents  lb 

Sea-bass 

Cod,  whole  .  . 

Porgy 

Flounder 

7     "      " 

7-10  cents  lb 

3-4       •'     "     

2-3       "     "     

THE  MIDDLEMEN  AND  DISTRIBUTERS     67 

get  their  produce  to  market.  The  city  is  blockaded 
against  them.  Often  their  produce  is  taken  by  the 
commission  men  and  sold  and  the  farmers  advised 
that  there  was  no  market  for  it  or  that  it  had  to  be 
destroyed  by  order  of  the  health  department.  At 
other  times  produce  fails  to  realize  enough  to  pay 
freight  rates.  Frequently,  food  from  a  distance  is 
permitted  to  spoil  or  is  thrown  into  the  river,  to 
keep  up  prices.  At  other  times  it  is  held  up  by 
railroad-car  shortage  and  lack  of  terminal  facilities. 
The  farmer  cannot  now  market  directly  as  he  for- 
merly could,  and  he  cannot  afford  a  personal  rep- 
resentative in  the  city.  As  a  result,  he  is  left  to  the 
tender  mercies  of  a  group  of  distributers  acting  in 
co-operation  with  the  railroads,  cold-storage  plants, 
and  packers,  all  of  whom  enjoy  special,  preferential 
pri\aleges  which  the  independent  shipper  cannot 
secure. 

The  food  manipulators  of  New  York  are  given  a 
practical  monopoly  of  the  terminal  facilities  of  the 
railroads,  which  are  essential  to  the  disposal  of  food 
to  the  retailers.  Even  the  State  Department  of 
Foods  and  Markets  of  that  State,  which  aims  to 
help  the  farmer  find  a  market,  is  discriminated 
against.  The  various  groups  of  middlemen  have 
powerful  financial  and  political  organizations  and 
maintain  themselves  against  the  unorganized  farm- 
ers, on  the  one  hand,  and  the  equally  unorganized 
consumers  on  the  other.    If  the  dealers  fulfilled 


68  THE  HIGH  COST  OF  LIVING 

merely  the  economic  function  of  distribution  and 
received  a  reasonable  return  for  the  service  there 
would  be  little  objection;  but  they  multiply  them- 
selves needlessly  and  exact  speculative  profits.  To 
such  an  extent  have  they  discouraged  the  farmers 
of  New  York  that  of  the  total  food  bill  of  the  city, 
amounting  to  $800,000;000  a  year,  only  5  per  cent., 
or  S40,000,000,  goes  to  the  farmers  of  the  State. 

The  distributing  middlemen  are  also  so  powerful 
politically  that  the  Department  of  Foods  and  Mar- 
kets of  New  York  State  has  never  been  able  to 
secure  an  adequate  appropriation  from  the  State 
to  make  a  real  experiment  in  co-operative  buying 
and  selling.  In  1915  the  department  began  market- 
ing various  kinds  of  food  products  in  New  York 
City.  It  undertook  the  disposition  of  peaches  of 
which  there  was  a  particularly  large  crop  that  year. 
An  agreement  was  made  with  the  Fruit  Auction 
Company,  and  substantial  advances  were  secured 
to  the  fanner  and  reductions  to  the  consumer  as 
well. 

Deputy  Hildebrand,  in  charge  of  the  auction- 
rooms  established  at  Franklin  Street  by  Commis- 
sioner Dillon,  says  that  the  department  is  being 
fought  by  raih'oads,  by  organized  business  interests 
of  certain  kinds  in  this  city,  and  by  many  other 
people.    In  an  interview  he  states: 

"The  question  of  apples  is  always  a  serious  one 
in  the  fall.    The  average  price  paid  the  farmer  is 


THE   MIDDLEMEN  AND   DISTRIBUTERS      69 

from  $3  to  $5  per  barrel  for  good  apples.  The  con- 
sumer pays  from  $12  to  $15  per  barrel  for  the  same 
apples.  Meanwhile  the  farmer  up-State  cannot  ship 
any  more.  There  is  no  market,  it  is  claimed,  or  the 
railroads  cannot  give  cars,  using  all  available  for  the 
long  hauls  from  the  Far  West,  for  instance." 

The  same  situation  obtains  in  all  other  fruits  and 
vegetables. 

This  is  the  way  the  railroads  join  with  the  dis- 
tributing agencies  and  speculators  to  discourage  local 
production.  The  distributers,  in  order  to  destroy 
local  competition,  prefer  long-distance  shipments. 
The  railroads  encourage  this  by  giving  preference 
to  cai's  from  Chicago,  Kansas  City,  and  other  dis- 
tant points,  which  are  sent  through  with  the  regu- 
larity of  passenger-trains  and  often  much  quicker 
than  from  the  near-by  New  York  points. 

This  is  indicative  of  the  many  different  kinds  of 
conspiracies  which  have  driven  the  Eastern  farmers 
and  truckmen  out  of  existence  and  concentrated 
the  control  of  the  food  supply  in  the  hands  of  the 
middlemen.  And  the  alliances  and  secret  arrange- 
ments with  railroads,  terminals,  cold-storage  plants, 
and  other  private  agencies  are  so  sul^tle  and  numer- 
ous that  they  cannot  be  traced  or  the  speculators 
brought  to  trial. 

In  the  matter  of  the  milk  supply  the  big  dealers 
or  distributers  control  the  prices  at  both  ends — • 
they  fix  the  price  the  farmer  receives  and  the  price 


70  THE  HIGH  COST  OF  LIVING 

the  consumer  must  pay.  The  sale  of  milk  in  New 
York  and  other  large  cities  is  in  the  hands  of  a 
virtual  trust.  The  consumer  must  pay  their  price 
or  do  without  milk.  Nor  do  the  distributers  guar- 
antee quality  to  the  consumer  although  they  exact 
it  from  the  producer.  The  volume  of  milk  produced 
does  not  affect  the  price,  as  the  dealers  insist  that  it 
does,  for  summer  or  winter  the  consumer  pays  the 
same  rates.  The  dealer  owns  the  utilities  of  dis- 
tribution— the  cans,  pasteurizers,  and  facilities  of  the 
shipping  and  finishing  stations.  If  one  dealer  re- 
duces the  price  paid  to  the  farmer  the  others  follow. 
This  is  harmful  to  the  consumer  also  as  it  drives 
many  farmers  out  of  business  and  reduces  the  sup- 
ply. On  the  other  hand,  if  one  dealer  raises  the 
price  to  the  consumer  all  do  the  same.  If  a  retail 
dealer  refuses  to  comply  with  the  demand  of  the 
trust  his  supply  is  cut  off  or  delivered  sour.  The 
dealer  reserves  to  himself  all  the  advantages  of  fa- 
vorable market  conditions  in  New  York. 

The  report  of  ex-Assistant  District  Attorney 
O'Malley  in  1910  of  milk  distribution  in  New  York 
showed  a  strong  organization  in  restraint  of  trade 
among  the  dealers.  If  a  dealer  ventured  to  sell 
below  the  trust  prices  the  '^dead"  wagon  was  sent 
over  his  route,  selling  milk  to  his  customers  at  ruin- 
ously low  prices,  till  he  was  driven  out  of  business. 
If  all  else  failed  his  horse  was  mysteriously  poisoned. 
Indictments  were  found  against  several  of  the  deal- 


THE  MIDDLEMEN  AND  DISTRIBUTERS       71 

ers  in  1910,  but  they  have  never  stood  trial.  The 
Httle  dealers  must  obey  the  big  ones  or  they  are 
forced  out  of  business.  The  dealers  break  up  co- 
operative creameries  wherever  possible  by  offering 
to  buy  the  milk  in  the  neighborhood  of  the  creamery 
and  to  pay  the  cartage  on  it.  This  was  the  general 
state  of  affairs  that  led  to  2-cent  milk  to  the  pro- 
ducer and  12-cent  milk  to  the  consumer  in  the  State 
of  New  York. 

To  counteract  these  influences  the  State  depart- 
ment of  foods  recommends  a  milk  depot  in  New 
York,  with  a  creamery  attached,  to  take  care  of  all 
surplus  milk.  Prices  would  be  fixed  daily  accord- 
ing to  supply  and  demand.  The  producers  demand 
it  and  have  asked  the  State  to  build  it.  They  are 
willing  to  pay  the  maintenance  and  amortization 
charges.  The  plan  was  opposed  by  the  dealers, 
however,  and  failed  in  the  legislature. 

In  the  case  of  anthracite  coal  there  is  the  same  sort 
of  a  monopoly  controlHng  the  output  and  in  alhance 
with  the  railroads  as  we  have  in  the  case  of  milk, 
only  the  coal  syndicate  is  composed  of  the  producers 
themselves  rather  than  the  dealers.  Nine  large  op- 
erating companies  control  75  per  cent,  of  the  an- 
thracite coal  of  Pennsylvania,  the  only  source  of 
supply.  Each  is  closely  allied  with  or  owned  by 
the  railroad  on  whose  line  it  is  located.  Conse- 
quently markets  that  are  advantageous  for  the  rail- 
roads, markets  which  give  them  a  long  haul,  are 


72  THE  HIGH  COST  OF  LIVING 

much  more  likely  to  have  their  coal  delivered  more 
promptly  and  cheaply  than  other  places. 

It  is  claimed  by  the  commission  on  the  cost  of 
living  of  the  commonwealth  of  Massachusetts  that 
New  England  markets  were  discriminated  against 
by  some  of  the  companies  during  the  year  1916. 
Anthracite  coal,  which  cost  $7.75  in  Boston  in  De- 
cember, 1914,  cost  $9.50  at  the  end  of  1916.  In 
other  cities  and  towns  of  Massachusetts  it  is  con- 
siderably higher,  reaching  $12  and  sometimes  more. 
Some  of  the  companies  curtailed  their  shipments  to 
New  England  and  the  orders  of  many  retailers  were 
only  partially  filled.  The  result  was  a  serious  short- 
age in  many  cities.^ 

The  retailer  is  at  the  mercy  of  the  operating 
companies  and  the  railroads  in  that  he  can  make 
no  contract  stipulating  delivery  on  a  certain  date 
and  at  a  certain  price.  He  must  take  his  coal  when 
the  railroads  can  conveniently  ship  it  and  at  the 
price  current  on  the  day  of  shipment.  The  com- 
mission reported  that  the  only  solution  of  the  diffi- 
culty lay  in  freeing  the  production  and  marketing  of 
coal  from  the  control  and  influence  of  the  railroads; 
that,  since  the  coal  production  is  in  the  hands  of  so 
small  a  group,  the  sale  and  distribution  of  the  coal 
should  be  regulated  by  the  Federal  Government. 
It  recommended  that  a  federal  agent  be  given  con- 
trol over  the  distribution  of  loaded  cai'S  and  the 

^  Report  of  the  Commission  on  the  Cod  of  Living,  Commonwealth  of 
Massachvsetts.     Report  on  Anthracite  Coal,  December,  1916. 


THE    MIDDLEMEN  AND   DISTRIBUTERS      73 

returning  of  empty  cars ;  that  the  railroads  be  forced 
to  give  to  coal  the  right  of  way  over  other  merchan- 
dise that  is  not  a  necessity  of  life;  and  that  maxi- 
mum prices  should  be  fixed  for  anthracite  coal  sold 
at  the  mines. 

Not  all  of  the  rise  in  the  price  of  anthracite  coal 
in  the  cities  of  New  England  has  been  illegitimate. 
There  was  an  actual  railroad-car  shortage,  due  to 
increased  traffic  in  other  commodities,  to  which 
traffic  coal-cars  were  often  diverted.  The  great 
jump  in  water  freight  rates  still  further  increased 
the  demand  upon  rail  transportation.  And  there 
were  other  reasons  for  the  rise  in  prices,  one  being 
the  greatly  increased  export  of  this  product.  Nev- 
ertheless, disciimination  against  certain  markets  not 
favored  by  the  railroad  companies  was  not  due  to 
any  legitimate  cause  but  solely  to  the  desire  of  the 
railroads  to  sell  where  the  hauls  were  most  profitable. 

The  price  of  flour  rose  from  $5.80  to  $11.25  and 
$12  a  barrel  between  1897  and  1917.  Two-thirds 
of  this  rise  took  place  between  1915  and  1917.  The 
cost  of  bread  rose  in  proportion.  The  actual  price 
of  the  loaf  did  not  rise  quite  so  rapidly,  but  this  was 
compensated  for  by  a  diminution  in  the  size  of  the 
loaf.  The  city  in  its  bread  consimiption  is,  there- 
fore, the  helpless  victim  of  the  grain  and  flour 
manipulators,  who  increase  the  price  of  the  ingredi- 
ents of  bread.  ^ 

^  Report  on  Bread,  Commission  on  the  Cost  of  Living,  Common- 
wealth of  Massachusetts,  January,  1917 


74  THE  HIGH  COST  OF  LIVING 

The  city  of  Boston  suffers  not  only  from  the 
usual  embargo  on  products  from  outside  the  city 
but  is  hampered  still  further  by  a  particularly  in- 
adequate system  of  internal  transportation  of  mer- 
chandise. This  adds  to  the  difficulties  of  the  farm- 
ers of  Massachusetts  in  securing  a  large  and  accessi- 
ble market  in  Boston  and  appreciably  increases  the 
cost  of  living.  One  of  the  chief  needs  of  the  city  in 
meeting  the  situation,  says  the  report  on  transporta- 
tion, is  a  wholesale  terminal  market. 

This  is  merely  suggestive  of  the  blockade  through 
which  the  food  and  fuel  supply  of  our  cities  must 
pass  from  the  producer  to  the  consumer.  It  af- 
fects every  article  of  daily  consumption — meat, 
eggs,  poultry,  fish,  butter,  fruit,  vegetables,  coal, 
and  lumber.  Prices  are  artificially  made.  They 
bear  no  relation  to  cost  of  production,  the  price  paid 
the  farmer,  or  the  service  rendered  by  the  middlemen. 
An  association  fixes  the  prices  at  what  the  traflEic 
will  bear.  An  investigation  of  the  prices  demanded 
for  turkeys  during  the  Thanksgiving  season  of  1916 
showed  that  the  middlemen  added  100  per  cent,  to 
the  cost  of  the  patriotic  bird  to  the  consumers  of 
New  York.  Their  profits  were  estimated  to  be  in 
excess  of  $1,500,000. 

One  of  the  worst  results  is  the  destruction  of  agri- 
culture about  the  great  cities,  for  it  is  to  the  interest 
of  the  railroads  to  bring  supplies  from  as  long  a 
distance  as  possible.    Food  from  the  Far  West  gives 


THE  MIDDLEMEN  AND  DISTRIBUTERS      75 

them  from  ten  to  twenty  times  the  haul  from  the 
near-by  points.  And  as  the  railroads  either  control 
or  work  with  the  distributing  agencies,  the  latter 
can  only  acquiesce  in  the  proceedings.  The  farmer 
is  helpless,  as  is  the  consumer.  The  fact  that,  as 
already  stated,  of  New  York's  $800,000,000  food  bill 
only  $40,000,000,  or  5  per  cent.,  comes  from  the 
farmers  of  New  York  State  is  one  reason  why 
only  40  per  cent,  of  the  land  of  the  State  is  un- 
der cultivation  and  only  375,000  people  out  of  10,- 
000,000  are  agriculturists.  The  railroads  have  de- 
stroyed farming  in  New  York  in  order  that  they 
may  enjoy  the  earnings  that  come  from  a  thousand- 
mile  haul  from  the  Far  West. 

The  food  speculators  and  gamblers  form  an  al- 
most endless  hierarchy  of  operators,  each  one  of 
whom  is  interested  in  inflating  the  prices  as  high 
as  possible  in  order  to  secure  the  largest  possible 
profit  before  he  passes  the  produce  on  to  another. 
A  useful  ser\dce  is  performed  by  a  small  portion  of 
them,  but  service  is  secondary  to  speculation.  In 
other  words,  a  legitimate  function  has  been  con- 
verted into  a  gambling  transaction,  and  in  the  proc- 
ess a  large  number  of  perfectly  useless  intermedi- 
aries have  wedged  themselves  in  between  the  pro- 
ducer and  consumer.  It  is  difficult  to  tell  the  cost 
in  actual  dollars  to  the  consumer,  or  the  increase 
in  price.  Farm  produce  is  marketed  whose  cost  to 
the  consumer  is  four  or  five  times  what  the  producer 


76  THE  HIGH  COST  OF  LIVING 

receives.  Instances  of  the  destruction  of  great 
quantities  of  food  to  keep  up  the  combine  have 
been  reported,  while  the  withholding  of  food  to  pro- 
duce famine  prices  is  so  common  as  no  longer  to 
excite  comment. 

These  manipulators  in  the  food  centres  of  the 
countiy  fall  into  several  groups,  of  which  the  chief 
are:  (1)  the  railroads;  (2)  the  refrigerator-cars;  (3) 
the  banks  working  in  sympathy  or  co-operation  with 
the  other  agencies;  (4)  the  food  exchanges  which  fix 
prices  in  the  various  cities  and  control  the  auction 
and  selling  agencies ;  (5)  the  grain  elevators  and  ware- 
houses;    (6)    cold-storage   plants   and   warehouses; 

(7)  the  packing-houses  of  the  Western  cities;  and 

(8)  the  middlemen,  jobbers,  and  wholesalers  who 
stand  between  the  terminal  agencies  and  the  retail 
stores. 

These  arc  the  profit-taking  agencies  between  the 
producer  and  the  consumer.  They  not  only  take 
toll  for  the  service  they  perform,  but,  what  is  far 
more  costly,  each  is  interested  in  creating  a  con- 
tinuing condition  of  artificial  scarcity  so  as  to  col- 
lect an  additional  tribute  through  speculation. 


CHAPTER  VIII 
THE  TRANSPORTATION   EMBARGO 

England  and  France  discovered,  when  the  war 
broke  out,  that  they  could  not  trust  their  transpor- 
tation systems  in  private  hands  when  the  Hfe  of  the 
nation  was  in  the  balance,  and  both  countries  im- 
mediately took  over  the  operation  of  the  railroads. 
There  was  no  hesitation,  no  delay,  no  two  minds 
about  it.  After  generations  of  fervid  insistence  that 
the  railroads  must  be  left  in  private  hands,  even 
those  who  had  been  loudest  in  protest  declared  that 
they  must  be  run  by  the  state. 

We  can  no  more  have  a  properly  functioning  so- 
cial organism,  with  its  transportation  agencies  in 
private,  profit-making  hands,  quarrelling  all  the 
time  with  the  public,  with  Congress,  with  the  courts, 
the  Interstate  Commerce  Commission,  forty  odd 
State  railroad  commissions,  with  cities,  chambers 
of  commerce,  farmers,  shippers,  and  consumers  all 
over  the  countiy,  than  we  can  have  a  properly 
functioning  human  being  with  his  circulatoiy  sys- 
tem in  outside  hands.  And  we  cannot  assure  ade- 
quate protection  to  the  farmer  or  the  consumer,  we 
cannot  secure  fair  prices  until  the  whole  business  of 

transportation,  warehousing,  and  storage  becomes  a 

77 


78  THE  HIGH  COST  OF  LIVING 

government  function  as  it  is  in  almost  every  other 
civilized  state.  ^ 

And  this  should  be  done  immediately  if  we  are 
to  protect  the  farmers  who  are  responding  to  the 
call  of  the  President  to  plant,  to  bring  forth  wealth 
from  the  ground.  For  they  may  see  their  labor 
and  expenditure  go  for  naught,  and  the  consumer  a 
few  miles  away  go  hungry  for  food  because  of  the 
breakdown  of  the  transportation  agencies  which  have 
failed  in  their  undertakings.  The  submarine  block- 
ades the  British  people,  but  the  railroads  of  the 
United  States  are  blockading  the  people  of  the  United 
States. 

For  over  twelve  months — in  fact,  for  a  half  dozen 
years — industr}^,  agriculture,  and  the  life  of  the  coun- 
try has  suffered  far  more  seriously  than  any  one 
knows  from  the  shortage  of  cars  and  the  congestion 
of  roads  and  terminals.  For  a  year  there  has  been 
a  famine  in  fuel  in  many  sections  of  the  country. 
Individual  industries  have  been  compelled  to  sus- 
pend operations  because  of  car  shortage  or  conges- 
tion at  terminals.  Many  factories  have  been  forced 
to  run  at  from  one-third  to  one-half  of  their  capac- 
ity because  of  lack  of  fuel.  Coal-mines  have  been 
closed.  The  bituminous  coal-miners  of  the  Middle 
West  have  been  reduced  to  two  or  three  days'  work 


1  As  indicative  of  how  the  raili'oads,  when  publicly  owned,  co- 
operate to  encourage  agriculture  and  build  it  up,  see  chapters  on 
Australia  and  Denmark. 


THE  TRANSPORTATION  EMBARGO  79 

a  week.  The  same  has  been  true  in  the  anthracite 
region.  This  was  one  of  the  reasons  for  the  demand 
for  large  increases  in  wages  by  the  miners.  Auto- 
mobiles have  been  driven  from  the  factories  to  mar- 
ket by  the  tens  of  thousands  on  their  own  power. 

The  farmer  suffers  from  the  car  famine  along 
with  the  manufacturer.  So  do  food  dealers.  They 
were  unable  to  market  their  produce.  The  cost  of 
food  has  been  greatly  increased  as  has  the  price  of 
other  commodities.  Hundreds  of  millions  of  dollars 
is  a  conservative  estimate  of  the  loss  which  the 
country  has  suffered  by  reason  of  the  failure  of  our 
transportation  facilities  and  the  inability  of  the 
railroads  to  utilize  what  facilities  they  have.  In 
addition — and  this  is  one  of  the  unseen  costs  of  pri- 
vate ownership  of  the  railways — the  productive  ca- 
pacity of  the  country  is  in  a  state  of  semiparalysis 
which  costs  the  nation  far  more  than  the  unmediate 
loss  on  existing  shipments  or  the  high  freight  charges. 

And  this  has  been  a  continuing  condition  for 
many  years.  Some  years  ago  the  farmers  of  the 
Northwest  saw  the  result  of  their  year's  labor  rot- 
ting on  the  fields  because  of  the  shortage  of  cars. 
This  is  one  explanation  of  the  high  cost  of  living, 
of  the  prohibitive  price  of  food  and  of  fuel.  Food  and 
fuel  cannot  reach  the  market,  or  when  they  do  reach 
the  market  the  terminals  and  other  agencies  are  in- 
adequate to  receive  them. 

The  most  recent  announcement  of  the  railroads 


80  THE  HIGH   COST  OF   LIVING 

was  to  the  effect  that  conditions  in  April,  1917,  when 
there  was  a  shortage  of  140,000  cars,  were  the  worst 
in  history,  but  that  even  graver  congestion  was  in 
prospect. 

This  admission  was  made  when  the  effective  con- 
duct of  the  war,  the  support  of  England  and  France, 
the  suppl^-ing  of  munitions,  the  ecjuipment  of  our 
own  army  and  navy,  and  the  feeding  of  our  people 
were  involved.  We  have  directed  millions  of  farm- 
ers to  plant  and  harvest  food,  to  give  their  labor  to 
the  nation,  and  when  the  harvesting  has  been  done, 
the  whole  nation — ^yes,  the  whole  allied  world — may 
see  the  successful  conduct  of  the  w^ar,  which  has  cost 
millions  of  men  and  untold  billions  of  wealth,  im- 
perilled and  possibl}'  brought  to  naught  by  the  break- 
down of  transportation  facilities,  not  on  the  sea  but 
on  the  land. 

This  embargo  on  food  is  a  continuing  condition. 
It  recui's  each  year.  It  affects  the  wheat,  corn, 
and  cereal  crop  of  the  West  as  it  does  the  cattle- 
raisers.  The  railroads  admit  this.  Every  industrial 
centre  in  the  country  knows  it.  The  Interstate 
Commerce  Commission  has  stated  the  peril  in  the 
strongest  possible  words.  In  its  report  of  January 
13,  1917,  on  the  "Car  Supply  Investigation,"  the 
commission  said: 

"The  present  conditions  of  car  distribution 
throughout  the  United  States  have  no  parallel  in 
our  history.     In  some  territories  the  railroads  have 


THE  TRANSPORTATION  EMBARGO  81 

furnished  but  a  small  part  of  the  cars  necessary 
for  the  transportation  of  staple  articles  of  commerce, 
such  as  coal,  grain,  lumber,  fruits,  and  vegetables. 
In  consequence,  mills  have  shut  down,  prices  have 
advanced,  perishable  articles  of  great  value  ha^'e 
been  destroyed,  and  hundreds  of  car-loads  of  food 
products  have  been  delayed  in  reaching  their  natu- 
ral markets.  In  other  territories  there  have  been 
so  many  cars  on  the  lines  of  the  carriers  and  in  their 
terminals  that  transportation  service  has  been 
thrown  into  unprecedented  confusion,  long  delays 
in  transit  have  been  the  mle  rather  than  the  ex- 
ception, and  the  operation  of  established  industnal 
activities  has  been  made  uncertain  and  difficult. 
These  conditions  have  made  necessaiy  a  far-reach- 
ing investigation  by  the  commission  and  now  ur- 
gently demand  prompt,  decisive  action." 

The  circulatoiy  system  of  the  nation  must  function 
freely  and  adequately.  Failure  to  do  so  not  only  in- 
creases the  cost;  what  is  far  more  important,  it  de- 
stroys production.,  It  discourages  the  farmer  and 
the  manufacturer.  Probably  no  single  agency,  ex- 
cept the  private  monopoly  of  land  and  mineral  re- 
sources, is  as  responsible  for  monopoly,  for  cui'tailed 
production  and  the  high  cost  of  living,  as  the  private 
ownership  of  the  railways,  with  the  car  shortages, 
disciimination,  and  high  cost  of  service.  This  is 
true  of  coal,  of  oil,  of  raw  materials,  of  food  and  the 
necessities  of  life. 

In  spite  of  the  orders  of  the  Interstate  Commerce 
Commission  and  the  agreement  of  the  railroads  to 


82  THE  HIGH  COST  OF  LIVING 

correct  the  evils,  the  car  shortage,  and  with  it  dis- 
criminations, have  not  been  reHeved.  Probably  the 
evil  is  beyond  relief  by  the  railroads.  It  Is  inherent 
in  private  ownership. 

There  are  hundreds  of  railroads  in  the  country 
each  one  of  which  is  run  as  a  separate  business. 
They  ought  to  be  run  as  a  single  agency.  Their 
efficiency  would  possibly  be  doubled  if  the  colossal 
waste  now  involved  in  the  struggle  for  individual 
business  and  the  best  business  were  ended.  To-day 
one  railroad  has  its  eastern  terminals  filled  with 
cars  waiting  for  return  freights,  while  a  terminal  a 
few  blocks  away  is  clamorous  for  empty  cars.  The 
same  is  tme  of  locomotives.  Needless  trains  are 
run  just  to  maintain  competition.  Empty  trains 
pass  one  another  on  different  railroads  for  the  same 
reason.  Terminals  all  over  the  country  are  inade- 
quate to  handle  the  freight  when  it  reaches  them. 
They  are  glutted  with  cars,  some  held  for  weeks 
and  months  by  lack  of  terminal  facilities.  This  is 
one  explanation  of  the  shortage  of  cars.  Nor  can 
the  railroads  meet  this  situation.  The  cost  of 
bringing  the  railroads  up  to  our  needs  is  colossal. 
^Yhi\e  railroad  securities  have  been  watered  until 
the  roads  are  capitalized  at  $75,000  a  mile,  billions 
and  billions  are  needed  just  to  meet  present  needs, 
not  to  speak  of  future  development,  which  is  only 
less  urgent.  And  only  the  government  can  provide 
this  capital. 


THE  TRANSPORTATION  EMBARGO  83 

In  addition,  thousands  of  different  railroad  offi- 
cials, each  one  of  whom  is  interested  in  carrying  the 
freight  that  brings  the  highest  return  and  that  insures 
the  longest  haul  over  his  particular  road  are  deter- 
mining  for  us  what  commodities  shall  be  carried  and 
what  not.  There  is  little  thought  of  the  needs  of  the 
whole  nation  or  concern  for  the  industrial  and  agricul- 
tural life  of  the  whole  people.  Railroading  is  run  for 
the  railroads.  It  must  be  run  for  national  service — 
possibly  for  national  existence. 

This  is  not  a  fanciful  condition.  In  hearings  re- 
cently held  by  the  Federal  Trade  Commission,  wit- 
nesses stated  that  the  railroads  diverted  coal-cars 
from  the  transportation  of  fuel  to  the  transportation 
of  commodities  upon  which  higher  rates  were  ob- 
tainable. Coal-cars  were  diverted  to  the  carrying 
of  automobiles,  and  as  a  result  the  price  of  bitumi- 
nous coal  increased  $2  a  ton  at  the  mine  in  one  year's 
time.  It  doubled  and  trebled  the  price  in  many 
cities.  One  witness  stated  that  the  railroads  made 
use  of  the  alleged  car  shortage  to  coerce  the  mine- 
owners  to  sell  coal  to  the  railroads  on  the  road's 
terms.  He  stated  that  the  railroads  refused  to 
carry  coal  for  ordinary  commercial  purposes  in  order 
to  crowd  down  the  price  charged  for  their  own  use 
by  creating  a  glut  at  the  mines.  A  coal  operator 
on  the  Chesapeake  and  Ohio  road  said  that  one-half 
of  the  40,000  coal-cai-s  o\Mied  by  that  railroad  were 
being  used  for  the  transportation  of  other  commodi- 


84  THE   HIGH   COST  OF   LIVING 

ties  at  higher  rates.  Another  operator  said  that  the 
mines  could  supply  40  per  cent,  more  coal  if  they 
had  means  of  shippuig  it,  and  that  one-third  of  the 
bituminous  coal  mined  in  his  district  went  to  the 
railroads  at  a  price  arbitrarily  fixed  by  them. 

And  what  is  tme  of  coal  is  true  of  other  indus- 
tries; it  is  tme  of  food,  of  agricultural  produce>  and 
of  other  commodities  which  do  not  yield  the  highest 
rate  to  the  roads.  And  this  is  true  in  spite  of  the 
efforts  of  the  Interstate  Commerce  Commission  to 
correct  it,  after  the  most  direct  and  explicit  orders 
to  the  railroads. 

The  life  of  the  nation  rests  in  the  hands  of  the 
railroads.  Formerly  they  gave  preferential  rates 
to  communities  and  industries.  Now  they  favor 
commodities  that  pay  the  highest  rates  and  stai^e 
commodities  that  pay  low  rates.  The  whole  pro- 
ducing power  of  the  nation  may  be  strangled  by 
reason  of  a  discrimination  against  fuel,  while  the 
workers  may  hunger  for  food  and  the  farmers  lose 
the  product  of  a  year's  effort  because  there  is  more 
money  to  be  made  by  the  railroads  in  transporting 
luxuries  than  by  transportuig  food  supplies  or  fuel. 
The  farmers  are  patriotically  responding  to  the  call 
to  feed  America  and  her  allies.  Yet  their  efforts 
may  go  for  naught  and  their  service  be  in  vain 
because  the  transportation  agencies  cannot  or  will 
not  socialize  theii'  efforts  and  serve  the  nation's 
needs. 


THE  TRANSPORTATION  EMBARGO  85 

This  is  another  reason  for  immediate  pubHc  own- 
ership. The  railroads  cannot  be  trusted  at  any 
time,  certainl}^  they  ought  not  be  trusted  at  this 
time,  to  determine  for  the  nation  and  the  allied 
cause  what  freight  shall  be  hauled  and  what  not. 
The  railroads  might  be  trusted  in  this  matter  were 
it  not  for  the  fact  that  it  is  to  their  interest  in  many 
cases  to  decide  wrongly.  That  is  what  is  happening 
to-day,  for  it  is  this  wrong  decision  that  has  caused 
the  famine  in  fuel  all  over  the  country. 

For  the  railroads  must  make  money.  That  is  the 
first  obligation  on  the  directors  and  the  president. 
Their  patriotism  may  cany  them  a  long  way,  but 
they  dare  not  cripple  theii-  property  or  permit  its 
earnings  to  fall.  And  much  of  the  freight  that  is 
most  important  to  the  nation  is  the  freight  that 
yields  the  smallest  revenue.  Every  temptation  ex- 
ists to  make  the  wrong  decision.  Food  and  fuel 
are  carried  at  lower  rates  than  are  non-essentials. 
It  is,  therefore,  to  the  interest  of  the  operators  to 
neglect  low-class  freight  and  favor  the  high-class 
freight  that  yields  the  big  returns  and  also  to  accept, 
for  the  same  reason,  that  freight  which  gives  them 
the  longest  haul. 

It  is  imperative  that  the  government  should  de- 
cide what  freight  is  most  urgent.  This  cannot  with 
safety  be  left  to  be  determined  by  private  profit, 
even  though  the  railroads  are  acting  under  a  pooling 
arrangement  and  are  endeavoring  to  serve  the  nation. 


CHAPTER  IX 

WHY  THERE  IS  NOT  MORE  FOOD 

As  a  result  of  the  conditions  described,  agricul- 
ture is  suffering.  The  farmer  is  being  driven  to  the 
wall.  He  has  to  overcome  so  many  obstacles,  his 
business  is  so  controlled  by  others,  and  he  is  subject 
to  so  many  failures  that  he  grows  discouraged. 
There  is  no  industry  in  the  country  that  is  as  help- 
less as  that  of  agriculture  and  no  industry  so  much 
in  need  of  protection.  It  is  not  the  exhaustion  of 
the  soil,  the  competition  of  the  better  land  of  the 
West,  the  lack  of  scientific  agriculture,  or  the  greater 
and  more  secure  gains  from  industry  that  is  driving 
the  farmer  from  the  land;  it  is  the  failure  of  the 
distributing  agencies,  the  exactions  of  the  middle- 
men, railroads,  and  bankers  that  are  making  agri- 
culture unattractive.  Under  the  provisions  of  the 
Lever  bill  recently  enacted  by  Congress,  millions 
of  dollars  have  been  appropriated  for  stimulating 
meat  production  through  the  prevention  of  cattle 
diseases  and  the  conservation  of  meat  and  dairy 
products.  Millions  more  have  been  appropriated 
for  the  distribution  of  seeds,  for  the  elimination  of 
waste,  and  for  education.    Yet  a  little  study  would 

have  satisfied  Congress  that  the  farmer  does  not 

86 


WHY  THERE  IS  NOT  MORE  FOOD         87 

want  outdoor  relief.  What  he  wants  is  a  policeman. 
The  farmers  know  what  is  the  matter  with  agricul- 
ture. They  say  that  the  conditions  under  which 
food  is  marketed  in  this  country  are  so  bad  that 
there  is  little  incentive  for  production. 

The  farmer  does  not  want  free  seeds;  he  wants 
a  chance  to  market  his  produce.  Otherwise  he  says 
there  is  no  use  in  producing.  He  works  hard  enough, 
but  the  State  by  inaction  permits  his  produce  to 
rot  in  the  ground  or  to  be  sold  at  a  low  figure  or 
loss  when  it  reaches  the  market.  This  is  happening 
all  over  the  country.  The  farmer  knows  it.  Scores 
of  official  investigations  have  made  it  plain,  and 
farmers'  organizations  have  appealed  for  years  for 
protection — protection  from  what  is  in  effect  pure 
robbery.  And  the  robbery  has  been  so  systematic 
and  so  long-continued  that  in  many  sections  of  the 
countiy  the  farmer  is  givmg  up  in  despair. 

A  generation  ago  even  the  smallest  farmer  raised 
diversified  crops.  He  raised  wheat,  corn,  vegetables, 
and  fruit,  as  well  as  cattle,  hogs,  sheep,  and  poultry. 
From  all  these  activities  he  was  able  to  make  a 
comfortable  living.  If  one  crop  failed  there  were 
others  to  fall  back  upon.  And  the  faraier  was 
reasonably  contented  with  his  lot,  as  he  is  in  those 
countries  where  he  is  protected  in  his  calling.  The 
pnces  of  food  were  low.  There  was  little  or  no  com- 
plaint about  the  cost  of  living. 

Marketing  was  simple.    The  farmer  sold  to  the 


88  THE  HIGH  COST  OF  LIVING 

near-by  store.  In  most  towns  there  was  an  open 
public  market  to  which  the  farmer  came  once  or 
twice  a  week,  as  is  still  the  case  in  many  Southern 
cities.  He  brought  his  cows,  hogs,  and  sheep  to  the 
local  slaughter-house,  where  he  sold  to  the  local 
butcher.  The  farmer,  like  every  other  business 
man,  dealt  directly  with  the  buyer,  who  was  compet- 
ing with  other  buyers.  Demand  and  supply  estab- 
lished prices  just  as  they  do  where  competition  is 
free.  And  the  prices  so  established  approximated 
the  reasonable  costs  of  production  plus  a  competi- 
tive profit. 

As  cities  grew  in  population  and  the  market 
was  widened,  the  business  of  distribution  became  an 
important  industry.  It  was  specialized.  The  dis- 
tributers found  it  to  their  profit  to  work  in  har- 
mony so  that  they  could  fix  the  prices  paid  for 
foodstuffs.  Then  they  developed  distant  sources 
of  supply,  partly  because  of  the  increased  demand, 
partly  as  a  means  of  controlling  local  prices.  With 
the  development  of  the  cattle-ranges  of  the  West  the 
raising  of  l^eef  and  hogs  became  a  great  industry. 
Packing  centres  were  developed  in  Chicago,  Omaha, 
Kansas  City,  Fort  Worth,  and  elsewhere  to  which 
the  drovers  shipped  their  cattle.  For  a  time  the 
packing-houses  competed  with  one  another,  but  they 
were  soon  di'awn  together  by  an  identity  of  interest 
in  keeping  down  the  price  of  beef  on  the  hoof,  on 
the  one  hand,  and  increasing  the  price  of  meat  on 


WHY  THERE  IS  NOT  MORE  FOOD  89 

the  other.  Ultimately  the  packing-houses  became 
in  effect  a  combine  of  four  or  five  great  firms.  The 
shipments  of  meat  to  Em-ope  and  the  Eastern  cities 
required  refrigerator-cars,  and  the  railroads  per- 
mitted the  packers  to  take  over  this  business,  the 
railroads  hauling  the  cars  as  they  do  coal-cars  and 
cars  owned  by  the  fast-freight  lines  and  express 
companies.  Soon  the  refrigerator-car  lines,  owned 
by  the  packers,  acquired  control  of  the  transporta- 
tion of  meat.  Then  they  entered  other  fields.  The 
cars  are  used  for  the  transportation  of  fruit,  vege- 
tables, and  perishable  produce  from  California  and 
Florida.  The  packing-houses  became  interested  in 
other  kinds  of  food,  and  to-day  they  are  in  sub- 
stantial control  of  the  distribution  of  the  perishable 
food  supply  of  the  country  through  their  control 
of  the  transportation  and  the  cold-storage  terminal 
warehouses  which  they  own  all  over  the  coimtry. 

The  railroads  are  not  only  directly  connected  with 
the  packing-houses  through  interlocking  directorates 
and  common  ownership;  it  is  to  their  advantage 
to  encourage  long-haul  business.  It  is  to  their  in- 
terest to  bring  food  from  as  great  a  distance  as 
possible.  And  they  co-operate  wdth  the  packers  to 
discriminate  against  the  supply  of  cattle  by  local 
farmers.  They  make  it  difficult  for  Eastern  farmers 
to  secure  transportation.  They  shut  them  out  of 
the  local  market.  This  discouraged  local  cattle- 
raising.     Far  more  effective  was  the  control  of  the 


90  THE  HIGH  COST  OF  LIVING 

local  meat-dealers  and  the  local  slaughter-houses 
by  the  packers.  This  control  was  brought  about 
in  a  variety  of  ways.  The  packers  erected  cold- 
storage  plants  in  the  cities.  Local  butchers  had  to 
come  to  them  for  meat  and  especially  for  canned 
meat  and  by-products.  And  the  packers  refused  to 
sell  to  them  unless  they  accepted  their  terms.  If 
the  local  butchers  insisted  on  buying  local  meat, 
the  packing-houses  opened  independent  butcher 
shops  and  sold  meat  at  so  low  a  figm'e  that  the  in- 
dependent butchers  were  driven  out  of  business. 
Or  they  bought  out  the  local  slaughter-houses  and 
closed  them  down  so  that  the  farmer  had  no  place 
to  kill  his  cattle.  A  quarter  of  a  century  ago  almost 
every  town  contained  a  slaughter-house.  To-day 
they  do  not  exist  or  do  a  veiy  small  business.  In 
every  other  country  of  the  world,  with  the  excep- 
tion of  the  United  States,  cattle  are  killed  at  local 
abattoirs.  And  everywhere,  with  the  possible  ex- 
ception of  the  United  States  and  Great  Britain, 
cattle  must  be  slaughtered  in  public  abattoirs. 
Private  plants  are  not  permitted.  As  a  result,  in 
Germany  there  are  one  thousand  public  abattoirs, 
every  city  of  any  size  having  a  meat-killing  estab- 
lishment, which  is  one  of  the  show-places  of  the 
city. 

The  railroads  derived  no  revenue  from  cattle 
driven  to  market  on  the  hoof  and  little  revenue  on 
cattle  from  the  neighboring  country.    They  desired 


WHY  THERE  IS  NOT  MORE  FOOD         91 

long-haul  traffic.  And  this  was  to  be  obtained  by 
co-operation  with  the  great  packing-houses.  But, 
even  aside  from  this  co-operation,  the  refrigerator- 
car  companies,  the  packing-houses,  and  the  railroads 
are  so  interlocked  in  their  ownership,  as  shown  by 
the  report  of  the  Pujo  investigating  committee  of 
Congress,  that  the  railroads  would  have  united  with 
the  packers  irrespective  of  their  interest  in  freight 
revenues.^ 

It  is  by  this  conspiracy  of  the  transportation, 
packing-house,  and  cold-storage  industries  that  the 
raising  of  cattle  all  over  the  country  has  been  dis- 
couraged or  killed  entirely.  It  is  only  partly  true, 
if  at  all,  that  the  production  of  cattle,  hogs,  and 
sheep  has  been  killed  by  the  cattle-ranges  of  the 
West.  It  has  really  been  killed  by  the  inability  of 
the  local  farmer  to  find  a  market.  And  to-day,  in 
spite  of  the  attempts  of  the  Interstate  Commerce 
Commission  to  regulate  railroads  and  refrigerator- 
cars,  it  is  very  difficult  for  the  farmers  of  New  York 
to  secure  transportation  to  the  city,  although  the 
fanners  of  California  and  Texas  ship  train-loads 
of  food  which  are  delivered  with  the  regularity  of 
passenger-trains  and  frequently  in  less  time  than 

1  The  methods  employed  by  the  railroads  to  discourage  or  stifle 
industry  are  indicated  by  the  investigations  of  the  Federal  Trade 
Commission  and  the  Interstate  Commerce  Commission  in  relation 
to  the  recent  car  shortage  and  the  manipulation  of  the  coal  market. 
Wherever  it  is  to  the  private  interest  of  the  railroads  to  discourage 
an  industry  they  do  so.  This  evil  is  inevitable  under  private  own- 
ership of  the  transportation  agencies. 


92 


THE  HIGH  COST  OF  LIVING 


it  takes  to  secure  a  delivery  from  a  shipping-point 
fifty  miles  away. 

Gradually,  cattle,  sheep,  and  hogs  ceased  to  be 
raised  by  the  ordinary  farmer.  They,  too,  secured 
their  meat  from  the  Western  packers.  Ultimately 
the  local  slaughter-houses  were  bought  out  by  the 
packers  or  were  put  out  of  business  by  competition, 
and  the  local  meat-dealers  became  in  effect  mere 
agents  of  the  great  packing-houses  which  controlled 
the  meat  supply. 

This  is  one  explanation  of  the  reduction  of  live 
cattle  and  with  it  dairying.  An  examination  of  the 
statistics  of  cattle  in  the  country  shows  the  extent 
to  which  the  raising  of  cattle  of  all  kinds  has  dimin- 
ished. 

The  statistics  of  domestic  animals  on  farms,  ac- 
cording to  the  census  of  1900  and  1910,  are  as 
follows : 


Year 

Dairy 

Cows 

All, 
Cattle 

Swine 

Sheep 

Goats 

1900 
1910 

18,108,666 
21,795,770 

69,335,832 
63,682,648 

64,686,155 
59,473,636 

61,735,014 

52,838,748 

1,948,952 
3,029,795 

The  number  of  dairy  cows  increased  by  only 
3,687,104  in  ten  years,  while  the  number  of  swine 
and  sheep  decreased  by  about  fourteen  million  head. 
The  total  loss  in  all  cattle  was  five  and  three-quarter 
million  head  at  a  time  when  the  population  of  the 


WHY  THERE  IS  NOT  MORE  FOOD         93 

country  and  the  consuming  power  of  all  classes  was 
increasing  rapidly. 

Similar  methods  are  employed  by  the  distributers 
to  kill  off  local  truck-gardening.  Local  produce  in- 
terferes with  the  control  of  the  market.  The  rail- 
roads again  find  it  to  their  advantage  to  bring  in 
food  from  a  distance,  while  the  middlemen  find  it 
much  easier  to  control  prices  if  they  are  free  from 
competition  by  the  neighboring  farmers.  And  all 
sorts  of  discriminations  are  made  against  local  pro- 
duction. The  farmers  find  it  difficult  and  expensive 
to  get  their  food  into  the  city.  There  are  no  ter- 
minals that  are  free  from  control.  Ofttimes  their 
consignments  are  rejected.  Often  they  are  left  to 
rot  at  the  terminals.  It  is  to  the  interest  of  the 
middlemen  to  keep  down  the  supply  and  prevent 
anything  like  an  excess  supply  in  the  market.  In 
time  the  city  becomes  dependent  on  vegetables 
brought  from  a  distance  just  as  it  becomes  depen- 
dent on  meat  brought  from  the  packing  centres. 
And  after  the  middlemen  and  distributers  have 
crushed  local  competition  they  treat  the  distant 
shippers  as  ruthlessly  as  they  do  the  near-by  farmer. 
They  refuse  his  shipments.  They  leave  consign- 
ments to  spoil  or  offer  the  shipper  a  price  that  is 
so  low  that  it  scarcely  pays  for  transportation.  In 
the  spring  of  1917,  when  Congress  was  debating  the 
food  bills  and  the  press  of  the  country  was  ringing 
with  condemnation  of  the  food  speculators,  800,000 


94  THE  HIGH  COST  OF  LIVING 

pounds  of  spring  vegetables  were  permitted  to  rot 
on  the  wharfs  along  the  Hudson  River.  Yet  the 
poor  of  New  York  were  on  the  verge  of  food  riots, 
with  car-loads  of  perishable  food  but  a  few  blocks 
away.  Commissioner  John  J.  Dillon,  commenting  on 
this  situation,  said:  "Not  only  were  the  people  of 
New  York  City  the  victims  of  such  a  market  system, 
but  farmers  of  the  South  who  sent  the  vegetables 
here  lost  many  thousands  of  dollars  in  freight  charges 
and  lost  labor  and  money  spent  to  produce  the 
vegetables.  The  farmers  who  sent  the  vegetables 
are  receiving  curt  wires  from  the  commission  men, 
saying  in  effect:  ' Market  oversupplied ;  no  demand; 
your  shipment  rotted  at  wharfs  for  want  of  buy- 
ers; health  authorities  condemned  entire  shipment.' " 
In  recent  years  Eastern  apples  could  not  be  mar- 
keted, but  car-loads  of  Oregon  apples  found  a  prompt 
and  regular  market  in  the  East.  Apples  which  the 
farmers  of  New  York  are  ready  and  eager  to  sell 
for  $2.50  a  barrel  rotted  on  the  ground  fifty  or  a 
hundred  miles  from  the  city,  while  car-loads  of  West- 
ern apples  are  sold  at  prices  prohibitive  to  the  poor. 
Peaches,  pears,  and  other  fmits  find  the  city  markets 
closed  against  them,  while  Florida,  Maryland,  and 
distant  producers  secure  cars  and  buyers  in  abun- 
dance. A  few  years  ago  nearly  every  city  was  sup- 
plied, in  part  at  least,  from  its  immediate  neighbor- 
hood. To-day  the  bulk  of  the  perishable  vegetables 
come  from  a  distance.    Even  eggs  and  poultry  can 


WHY  THERE   IS  NOT  MORE  FOOD 


95 


be  marketed  more  readily  from  Chicago  than  from 
a  point  within  a  few  miles  of  the  New  York  City  Hall. 
The  following  are  some  selected  farm  crops  taken 
from  the  census  retm'ns  of  1899  and  1909,  respec- 
tively, showing  the  extent  to  which  food  production 
has  fallen  off  :^ 


Crop 

1899 

1909 

Increase  or 
Decrease 

Corn  (bushels) .  . . 

2,666,324,370 

2,552,189,630 

-114,134,740 

Wheat  (bushels).. 

658,534,252 

683,379,259 

24,845,007 

Rye  (bushels)  .  .  . 

25,568,625 

29,520,457 

3,951,832 

Barley  (bushels).. 

119,634,877 

173,344,212 

53,709,335 

Cotton  (bales) .  .  . 

9,534,707 

10,649,268 

1,114,561 

Total  small  fruits 

(quarts) 

463,218,612 

426,565,863 

-36,652,749 

StrawbeiTies 

(quarts) 

257,427,000 

255,702,000 

-1,725,000 

Apples  (bushels). 

175,397,600 

146,122,318 

-29,275,282 

Total  orchard 

fruits  (bushels) 

212,365,600 

214,683,695 

2,318,095 

The  amount  of  food  produced  per  capita  of  our 
population  has  fallen  off  from  year  to  year  or  at 
best  remained  stationary  even  in  the  face  of  the 
export  demand  due  to  the  war,  as  indicated  by  the 
figures  on  page  96. 

There  has  been,  it  is  true,  a  noticeable  increase  in 
farm  production  along  some  lines.  Among  these 
are  California  fruits,  cereals  used  in  the  manufac- 
ture of  whiskey  and  beer,  sugar-beets,  figs,  rice,  and 
olives.  The  noteworthy  increases  are  in  articles  in 
which  the  producers  have  organized  for  marketing, 

^statistical  Abstract  of  the  United  States,  1914,  p.  142. 


96 


THE  HIGH  COST  OF  LIVING 


such  as  the  co-operative  seHing  agencies  of  California, 
or  in  trust-controlled  products  which  have  organized 
transportation,  or  in  those  articles  in  which  the  food 


Year 

Production  Pee  Capita 

Meats— heef,  veal,  mutton, 
and  pork 
(pound^ 

Milk 
(gallons) 

Eggs 
(dozens) 

1899 

1909 

1915 

248.2 
213.9 
219.6 

95.6 
81.0 
75.5 

17.0 
17.3 

17.8 

Year 

Production  Per  Capita 

Cereals — Com,  wheat,  and 

rice 

(bushels) 

Potatoes 
(bushels) 

Sugar 
(pounds) 

1899 

1909 

1915 

43.9 
35.3 
40.2 

3.6 
4.2 
3.5 

6.4 
18.3 
19.9 

trusts,  operating  refrigerator-cars,  protected  their 
own  supply.  In  those  instances  where  the  farmer 
was  unable  to  co-operate,  or  where  he  was  at  the 
mercy  of  the  railroads  and  distributing  agencies, 
the  output  of  the  farm  has  either  decreased  or  re- 
mained stationary.^ 

1  The  California  fruit-growers  market  67  per  cent,  of  the  citrus 
crop  of  that  State  directly  to  Eastern  markets  through  a  co-operative 
agency.  There  are  no  middlemen  or  speculators.  They  marketed 
$50,000,000  of  fruit  in  1916.  The  growth  of  the  industry  shows 
the  effect  of  freeing  production  from  control  by  the  distributers. 


Year 

Oranges 
(boxes) 

Lemons 
(boxes) 

Fig  8 
(pounds) 

Olives 
(pounds) 

1899 

1909 

6.167.000 
19.487.000 

876,876 
2.770,000 

12.994.000 
35.060.000 

5,053.000 
16,405.000 

WHY  THERE  IS  NOT  MORE  FOOD         97 

The  farmer  has  always  been  ready  and  wiUing  to 
produce.  And  he  has  continued  to  produce  even 
under  an  embargo  almost  as  tight  as  that  against 
a  belligerent  country.  But  gradually  one  line  of 
livehhood  after  another  has  been  taken  from  him 
by  the  railroads,  terminals,  refrigerator-car  com- 
panies, packers,  cold-storage  plants,  or  a  combina- 
tion of  middlemen  acting  in  concert  with  these 
agencies. 

This  is  why  farming  in  the  Eastern  States  has 
ceased  to  be  profitable.  This  is  why  farmers  have 
abandoned  their  farms.  They  have  been  driven 
from  them  by  the  distributing  agencies  who  really 
control  their  industry.  And  when  these  agencies 
had  destroyed  local  competition  and  built  up  pro- 
duction in  the  South  and  West,  when  the  local  abat- 
toir was  closed  and  the  local  market-house  had 
fallen  into  disuse,  when  the  farmer  ceased  to  pro- 
duce for  the  local  market  in  material  quantities, 
then  these  same  agencies  turned  on  the  big  producers, 
the  cattlemen  of  Texas  and  the  wheat-growers  of 
Dakota,  the  truckmen  of  the  South,  and  repeated 
the  same  process.  They  combined  against  the 
cattleman  and  paid  him  less  than  the  cattle  cost. 
They  rigged  the  price  of  wheat  in  the  grain-pit; 
they  glutted  the  local  markets  with  fruits,  vege- 
tables, and  perishables  from  a  distance,  and  com- 
pelled the  shippers  to  accept  ruinous  prices.  Often 
they  destroyed  the  shipments  to  keep  up  prices. 


98  THE  HIGH  COST  OF  LIVING 

Controlling  the  cold-storage  plants,  they  are  able 
to  buy  and  store  when  the  farmer  is  necessitous, 
and  then,  having  secured  control  of  the  market,  they 
boost  the  price.  There  is  no  single  trust-controlled 
industry  in  the  countiy  that  is  subject  to  as  many 
different  kinds  of  monopoly  as  is  food,  and  in  none 
of  them  has  there  been  so  much  to  discourage  pro- 
duction. 

The  same  conditions  prevail  as  to  cereal  products. 
Scattered  all  over  the  country  are  grain-elevators 
and  terminals.  These,  too,  are  privately  owned, 
frequently  by  the  directors  and  stockholders  of  the 
railroads.  Into  these  elevators  the  grain  of  the 
farmer  goes  while  waiting  shipment.  Here  the 
grain  is  graded  and  its  price  fixed  by  rules  estab- 
lished by  the  warehouses  and  millers.  The  farmers 
of  the  West  are  compelled  to  market  their  grain 
through  these  elevators  just  as  the  cattleman  must 
market  his  cattle  through  the  packing-houses.  The 
methods  employed  by  the  grain  exchanges,  packers, 
and  warehousemen  are  desciibed  in  other  chap- 
ters. 

Closely  linked  with  all  these  agencies  are  the 
banks  of  Chicago,  Minneapolis,  Kansas  City,  and 
the  other  food-terminal  cities.  The  banks  have 
branches  or  connections  over  the  West  which  make 
loans  to  the  farmers  and  the  cattlemen.  Through 
the  interlocking  interests  of  the  middlemen  and  the 
banks,  the  producers  are  compelled  to  sell  when  the 


WHY  THERE  IS  NOT  MORE  FOOD  99 

distributei's  decree.  They  first  fix  the  price  as  low 
as  possible  and  then  exert  financial  pressure  upon 
the  fanners  to  sell  at  the  season  when  prices  are 
low.  Then  after  the  food  supply  has  been  cornered 
prices  are  again  fixed  by  the  manipulators  for  the 
nation  and  the  world.  As  stated  in  previous  chapters 
the  farmers  and  cattlemen  in  the  West  were  forced, 
by  these  methods,  to  sell  their  produce  year  after 
year  at  less  than  cost. 

The  control  of  the  food  supply  of  America  is  more 
complete  than  any  one  really  knows.  And  no  mo- 
nopol}^  has  been  as  ruthless  in  its  treatment  of  the 
producers,  on  the  one  hand,  and  the  consumers  on 
the  other,  as  the  food  syndicates  which  operate  in 
all  of  the  larger  cities  and  which  control  almost 
every  article  of  food.  This  system  is  so  inter- 
related that  it  is  impossible  to  trace  the  conspiracies 
or  the  cost  of  the  manipulations  to  the  consumer. 
In  addition  to  these  agencies  there  are  monopoly- 
owned  steamship-lines  that  transport  nearly  all  of 
the  fruits  from  Florida  and  Central  and  South 
America,  from  the  Carolinas  and  the  eastern  shore 
of  Marjdand,  while  the  haulage  of  fruit,  of  meat,  of 
fresh  vegetables,  of  poultry,  butter,  and  eggs,  and 
of  perishable  products  by  land  is  done  by  the  re- 
frigerator-car companies,  owning  thousands  of  cars, 
which  are  hauled  by  the  railroads  at  an  agreed  rate. 
The  fast-freight  lines  give  their  owners  an  advan- 
tage over  other  competitors,  for  they  can  deny  cars. 


100  THE  HIGH  COST  OF  LIVING 

if  they  will,  and  by  a  variety  of  devices  prevent 
the  produce  of  the  competitor  from  ever  reaching 
the  market.  It  was  the  privately  owned  refriger- 
ator-cars that  enabled  the  packere  of  the  West  to 
perfect  their  monopoly  and  drive  competition  out 
of  this  field.  The  packing-houses  are  few  in  num- 
ber but  their  earnings  are  colossal.  The  earnings  of 
Armour  &  Company  in  1916  were  $20,100,000  as 
against  $7,509,000  in  1914.  The  earnings  of  Swift 
&  Company  in  1916  amounted  to  $20,465,000  as 
compared  with  $9,450,000  two  years  earlier.  The 
earnings  of  Morris  &  Company,  Wilson  &  Company, 
and  other  packers  were  equally  high,  while  the  earn- 
ings of  the  United  Fruit  Company  shot  up  from 
$2,264,000  in  1914  to  $11,943,000  in  1916. 

It  is  a  not  uncommon  experience  for  farmers  to 
send  a  car-load  of  fruit,  of  vegetables,  or  of  other 
produce  to  market  and  be  advised  that  there  is  no 
sale  for  it,  and  the  shipper  will  have  to  lose  the 
freight  as  well.  After  one  or  more  experiences  of  this 
kind  the  producer  goes  out  of  business.  He  aban- 
dons that  particular  line  of  production.  He  per- 
mits his  fiiiit  and  vegetables  to  rot  on  the  ground. 
When  the  dairyman  casts  up  his  accounts  and  finds 
that  the  price  he  receives  for  liis  milk  does  not  pay 
for  the  feed  of  his  cattle,  he  goes  out  of  the  dairy 
business.  After  the  local  truck-gardener  has  seen 
his  food  spoil  at  the  station  because  of  the  inabihty 
or  unwillingness  of  the  railroads  to  market  it,  he 


WHY  THERE  IS  NOT  MORE  FOOD       101 

throws  up  his  hands.  And  when  the  cost  of  trans- 
portation to  market  is  as  much  as  the  farmer  re- 
ceives for  his  labor,  he  comes  to  the  conclusion  that 
there  is  something  wrong  with  the  government  that 
permits  such  a  thing,  and  he  turns  away  in  despair, 
for  he  sees  no  prospect  of  relief. 

I  have  not  the  slightest  doubt  but  that  the  pro- 
duction of  food  of  all  kinds  would  be  increased 
enormously  aU  over  the  country  if  the  railroads 
were  in  public  hands.  I  believe  that  the  Eastern 
markets  could  be  supplied  from  their  own  doors 
if  they  were  free  from  the  discrimination  and  em- 
bargo which  now  prevails.  One  of  the  greatest  of 
all  obstacles  to  the  revival  of  farming  is  the  imcer- 
tainty  of  a  market  and  the  fear  that  the  transport- 
ing and  distributing  agencies  would  bring  the  efforts 
of  the  farmer  to  naught.  Other  countries  have  dis- 
covered that  these  agencies  cannot  with  safety  be 
left  in  private  hands,  and  in  other  countries  cities 
are  surrounded  by  gardeners  and  truckmen  who 
supply  the  local  market.^  They  raise  cattle,  sheep, 
hogs,  and  poultry,  and  sell  directly  to  the  retail 
merchants  or  through  the  markets  of  the  near-by 
cities.  These  countries  have  eliminated  the  private 
distributer  and  have  opened  up  the  highways,  the 
warehouses,  and  the  cold-storage  plants  and  made 


^  In  Baltimore,  where  splendid  markets  are  maintained  by  the  city, 
the  cost  of  living  is  very  low,  while  all  about  the  city  the  business 
of  truck-gardening  has  been  developed  to  satisfy  the  local  demand. 


102  THE  HIGH  COST  OF  LIVING 

them  agencies  of  service  rather  than  of  profit.  Such 
a  programme  is  necessary  in  the  United  States  if 
we  would  bring  agriculture  back  to  life  again  and 
reclaim  the  abandoned  farms  of  the  country  to  labor. 


CHAPTER  X 

DENMARK:  AN  EXPERIMENT  STATION  IN 
AGRICULTURE 

Some  years  ago  I  visited  the  little  state  of  Den- 
mark, which  protrudes  up  into  the  North  Sea  at 
the  western  corner  of  Europe.  As  I  crossed  the 
low-lying  moors  I  was  impressed  with  the  snug  little 
villages,  the  neat  and  attractive  farmhouses,  and 
the  buildings  in  the  towns.  But  most  of  all  I  was 
attracted  by  the  appearance  of  the  country,  the  in- 
tensive cultivation  of  the  soil,  the  use  of  every 
waste  place,  of  a  new  kind  of  agriculture  that  I  had 
not  seen  anywhere  else  in  Europe  with  the  exception 
of  Belgium  and  Holland. 

The  land  was  not  naturally  fertile.  That  was 
apparent  from  the  car  window.  Nature  had  been 
none  too  generous  with  this  little  corner  of  Europe, 
about  twice  the  size  of  Massachusetts,  and  with  a 
population  of  2,861,000,  about  half  the  population 
of  New  York  City,  of  which  about  40  per  cent,  live 
in  towns  or  cities  and  60  per  cent,  in  the  country. 

Copenhagen,  the  capital  city  of  500,000,  partook 
of  the  prosperity,  good  order,  and  cleanliness  of  the 
agricultural  towns  and  country  districts.  The  slums 
were  almost  negligible.    There  was  little  evidence  of 

103 


104  THE  HIGH  COST  OF  LIVING 

poverty.  All  classes  of  people  seemed  to  have 
leisure.  They  frequented  the  restaurants  and  caf^s, 
they  went  to  the  Tivoli — the  city's  pleasure  resort — 
in  the  evening  by  thousands,  where  rich  and  poor 
enjoyed  themselves  in  a  simple,  democratic  way. 
Everything  suggested  personal  and  poHtical  freedom, 
democracy  in  politics  as  well  as  in  life. 

Denmark  has  a  king,  it  is  true,  but  he  exercises 
little  power,  while  the  parliament,  I  learned,  was 
ruled  by  the  peasants,  or  small  farmers,  working 
in  co-operation  with  the  radicals  and  socialists. 
Women  have  recently  been  granted  the  ballot. 
And  the  upper  house  of  parliament,  which  is  the 
obstacle  to  progressive  legislation  in  most  of  the 
countries  of  the  world,  has  been  shorn  of  its  power. 

But  Denmark  is  particularly  interesting  at  the 
present  time  because  of  what  she  has  done  for 
agriculture,  for  keeping  her  people  upon  the  land, 
for  the  many  experiments  which  she  offers  to  the 
world.  For  Denmark  is  an  experiment  station 
whose  achievements  must  be  copied,  in  part  at  least, 
if  the  United  States  is  to  save  agriculture  from  de- 
cay and  keep  her  people  on  the  soil.  Denmark  has 
done  this  in  the  face  of  natural  obstacles  far  greater 
than  those  which  confront  any  other  country  unless 
it  be  Holland.  And  she  has  done  it  by  law,  by  the 
use  of  legislation  and  the  control  of  politics  in  the 
interest  of  the  farmere. 

Fifty  years  ago  Denmark  lost  her  choicest  posses- 


DENMARK:   AN   EXPERIMENT  STATION     105 

sions,  Schleswig  and  Holstein,  to  Germany.  Cheap 
agricultural  produce  from  the  American  West  threat- 
ened her  home  as  well  as  her  foreign  market.  Politi- 
cal and  industrial  depression  settled  upon  the  people. 
There  was  little  to  justify  hope  under  these  condi- 
tions. Yet  to-day  Denmark  is  one  of  the  wealthiest 
countries  in  Eui'ope  in  proportion  to  its  population. 
The  average  deposits  in  the  savings-banks  are 
$77.88.  In  England  they  are  only  $20.62  and  in 
the  United  States  $31.22.  The  number  of  depositors 
in  the  banks  is  higher  than  in  any  other  country, 
being  51  out  of  every  100.  And  78  per  cent,  of  the 
savings  are  in  the  rural  districts.  There  is  a  tele- 
phone in  nearly  every  fair-sized  farm,  while  Danish 
cattle,  Danish  bacon,  and  Danish  eggs  are  recognized 
for  their  superiority  all  over  the  world.  Before  the 
war  Denmark  supplied  Germany  with  a  considera- 
ble part  of  her  cattle;  the  Danish  dairies  supplied 
England  with  butter  and  the  British  people  with 
bacon  and  eggs.  There  were  no  high-cost-of-living 
investigations  in  Denmark;  there  are  no  monopolies 
or  trusts,  and,  while  the  country  has  few  persons  of 
great  wealth  and  relatively  little  industry,  more 
has  been  done  for  education,  and  intelligent  edu- 
cation, than  in  almost  any  countr}"  in  the  world. 

How  was  this  brought  about  in  the  face  of  a 
niggardly  nature,  a  chilly,  inhospitable  climate,  in 
a  relatively  poor  state  surrounded  by  greater  powers  ? 

The  movement  began  with  education — a  strange 


106  THE  HIGH  COST  OF  LIVING 

kind  of  education  that  has  no  exact  counterpart  in 
the  world.  The  nearest  approach  to  it  in  this  coun- 
try is  the  Gaiy  system,  with  this  important  differ- 
ence, that  the  Gary  system  is  primarily  designed 
for  the  cities  while  the  schools  of  Denmark  are  for 
farmers.  They  were  conceived  by  an  insurgent 
bishop,  Grundvig  by  name,  who  insisted  that  the 
schools  of  the  country  should  be  shaped  to  the  needs 
of  the  country.  He  saw  that  education  should  be 
agricultural  and  the  culture  of  the  country  should 
be  the  culture  of  the  farmer.  He  spent  his  life,  as 
most  agitators  do,  without  seeing  the  results  of  his 
efforts  come  true.  But  to-day  there  are  eighty-two 
of  these  people's  high  schools  in  Denmark,  each  one 
of  which  is  independent  in  its  administration  and 
each  of  which  is  a  centre  of  politics,  of  discussion, 
of  propaganda,  of  agricultural  training.  The  years 
of  attendance  are  from  16  to  35;  the  boys  attend  in 
the  winter  and  the  girls  in  the  summer.  The  cost 
to  the  pupil,  including  board  and  lodging,  is  about 
forty  dollars  a  year.  Text-books  are  but  little  used. 
Classroom  work  of  the  ordinary  kind  is  of  secondary 
importance.  The  schools  idealize  country  life  and 
the  nobility  of  manual  toil.  To  attend  one  of  these 
schools  is  the  ambition  of  the  peasant.  He  is  taught 
the  history  of  his  country.  He  learns  the  songs  of 
Denmark.  He  acquires  a  strong  body.  In  addi- 
tion, the  curriculum  includes  farm  accounting,  nat- 
ural science,  drawing  and  surveying,  bookkeeping, 


DENMARK:  AN  EXPERIMENT  STATION    107 

and  agricultural  economics  of  all  kinds.  Round 
about  the  schools  are  experimental  farms.  The  stu- 
dent learns  about  agriculture  and  the  conduct  of  the 
thousands  of  co-operative  societies  which  are  to  be 
found  all  over  Denmark.  He  acquires  a  love  for 
farming  and  a  scientific  appreciation  of  its  possibil- 
ities and  its  joys.  About  10,000  pupils  attend  these 
schools  every  year. 

The  Danish  fanner  is  the  most  intelligent  farmer 
in  the  world.  And  he  has  a  culture  of  his  own, 
gained  from  the  emphasis  which  has  been  put  upon 
farming  by  the  nation.  For  not  only  education 
but  legislation  and  the  politics  of  the  state  are  con- 
centrated on  agriculture  as  the  predominant  inter- 
est of  the  people.  And  as  a  result  of  education,  a 
widely  read  press,  and  endless  political  organizations 
the  famier  has  become  the  ruling  class  in  the  state. 
He  dominates  parliament.  Members  of  the  min- 
istry are  chosen  almost  exclusively  from  among  the 
peasants,  and  the  railroads,  taxation,  and  social 
legislation  are  directed  to  the  intelligent  upbuild- 
ing of  agriculture. 

And  back  of  everything  else,  and  in  a  sense  ex- 
plaining it,  is  the  relation  of  the  people  to  the  land. 
Fifty  years  ago  Denmark  was  divided  into  great 
estates  as  still  is  a  great  part  of  Europe.  The 
feudal  system  had  survived.  The  great  landown- 
ers, the  titled  nobility  of  the  country,  ruled  parlia- 
ment in  their  own  interests.    They  shifted  the  taxes 


108  THE  HIGH  COST  OF  LIVING 

onto  the  peasants.  They  kept  theni  in  ignorance. 
They  refused  to  amehorate  the  condition  of  the 
agricultural  worker,  who  was  little  better  than  a 
serf.  Denmark  was  a  landed  oligarchy,  the  upper 
house  of  parliament  being  a  kind  of  House  of  Lords. 

All  this  has  been  changed.  The  Danish  farmer 
is  no  longer  a  tenant.  He  owns  his  own  farm. 
And  being  an  owning  famier,  he  has  eveiy  stimulus 
and  ambition  to  improve  his  farm.  In  this  he  is 
like  the  French,  Swiss,  and  Dutch  peasant.  To-day 
90  per  cent,  of  the  farmers  of  Denmark  own  their 
own  farms  as  compared  with  63  per  cent,  in  the 
United  States.  In  the  South  and  West  the  percent- 
age of  farm  ownership  in  this  country  is  very  much 
lower.  In  the  new  State  of  Oklahoma  farm  owner- 
ship amounts  to  only  45  per  cent.,  in  Alabama  to 
40  per  cent.,  and  in  Texas  to  48  per  cent.  And  in 
many  counties  throughout  the  West  farm  owner- 
ship has  dwindled  to  30  per  cent,  of  the  farming 
population. 

The  Dane  appreciated  that  the  first  necessity  of 
successful  agriculture  was  ownership.  For  the  his- 
tory of  every  country  shows  that  tenant  farming  is 
wasteful  and  indifferent.  It  leads  to  the  exhaustion 
of  the  soil.  The  tenant  has  no  ambition ;  he  makes 
no  effort  to  improve  his  farm;  he  has  little  politi- 
cal and  social  interest  whether  it  is  in  Ireland  or 
America.  And  home  ownership  has  changed  the 
entire  psychology  of   Denmark.    It  has   changed 


DENMARK:  AN  EXPERIMENT  STATION    109 

agriculture  and  politics  as  well.  For  as  soon  as  the 
Dane  acquired  a  farm  he  began  to  have  many  other 
interests.  He  protested  against  the  rulership  of  the 
landed  aristocracy  and,  being  in  the  majority,  he 
sought  a  more  democratic  form  of  government. 
Year  by  year  his  control  of  parliament  has  been 
strengthened,  until  to-day  the  peasant,  with  the 
more  radical  groups  from  the  towns,  controls  the 
government  of  the  country. 

And  being  a  home-owning  farmer  and  realizing 
its  advantages,  the  peasant  worked  out  a  construc- 
tive plan  for  breaking  up  the  remaining  feudal  es- 
tates and  for  distributing  the  land  among  his  sons 
and  the  workers  of  the  city.  An  appropriation  of 
$10,000,000  was  first  made,  to  be  allotted  by  an 
agricultural  commission  to  persons  who  desired  to 
acquire  faiTns  costing  in  the  neighborhood  of  $1,200. 
The  applicant  needs  only  provide  10  per  cent,  of  the 
cost;  the  state  provides  90  per  cent.  The  would- 
be  farmer  must  be  indorsed  by  other  farmers  and 
have  had  some  experience  in  agriculture.  He  pays 
interest  at  the  rate  of  3  per  cent,  upon  the  loan 
advanced  by  the  state  and  is  given  from  thirty  to 
forty  years  in  which  to  repay  the  capital  loan  in 
annual  instalments  of  from  1  to  2  per  cent.  The 
new  farmer  is  aided  by  his  neighbors.  The  state 
itself  sends  agents,  who  instruct  him  in  planting,  in 
dairying,  in  the  rotation  of  crops  and  the  care  of 
the  soil.    Under  this  law  the  number  of  peasant 


110 


THE  HIGH  COST  OF  LIVING 


owners  have  increased  year  by  year,  until  to-day 
nine  out  of  ten  farmers  own  their  own  farms. 

These  farmers  of  Denmark  are  distributed  as 
follows : 


Size  of  Farms — 
Acres 

Number  op 

Farms  in  This 

Class 

Total  Number 

OF  Acres  in 

Class 

Averaoe  Size 
OF  Farms 

Less  than  1 3^2  •  •  • 

lJ^-133^  

131^-40  

40-150  

150-650  

More  than  650.  . 

68,000 
65,000 
46,000 
61,000 
8,000 
822 

25,000 
450,000 
1,150,000 
5,900,000 
2,100,000 
1,150,000 

.  37  acres 

7.00     " 

25.00     " 

97.00     " 

263.00     " 

1,400.00     " 

The  average  size  of  the  248,000  farms  of  the  first 
five  classes,  which  comprise  nine-tenths  of  the  land, 
is  but  39  acres.  Of  these,  68,000  farms  average  less 
than  one-half  an  acre  each.  The  veiy  large  farms 
of  the  old  feudal  nol^ility  comprise  only  about  one- 
tenth  of  the  total  agricultm-al  area. 

The  people's  high  schools  form  the  educational, 
and  fai'm  ownership  the  economic,  foundation  of 
agriculture  in  Denmark.  And  each  reacts  upon  the 
other.  The  peasant  is  willing  to  pay  for  education 
because  he  realizes  that  it  increases  his  efficiency  and 
the  output  of  his  farm.  And  education,  in  turn, 
trains  the  farmer  to  self-reliance,  to  a  knowledge 
of  politics  and  of  co-operative  group  action  as 
well. 

As  a  result  of  these  two  agencies,  Denmark  has 
become  an  agricultural  state  par  excellence.     One 


DENMARK:  AN  EXPERIMENT  STATION    111 

middleman  after  another  has  been  eliminated,  until 
to-day  the  peasants  form  a  producing,  distributing, 
and  banking  organization,  handHng  through  their 
thousands  of  co-operative  organizations  eveiy  line 
of  business  which  affects  their  life.  The  railroads 
are  owned  by  the  state  and  are  run  for  the  farmers. 
Freight  rates  are  adjusted  so  as  to  place  Danish 
produce  in  Germany  and  England  at  the  lowest  pos- 
sible cost.  Before  the  war  steamships  plied  from 
Danish  ports  to  England  with  the  regularity  of  ex- 
press service,  so  that  Danish  butter  and  eggs  could 
be  laid  fresh  in  the  British  market.  Earnings  of  the 
railroads  are  kept  low  in  order  to  encourage  agri- 
culture. The  express,  telephones,  and  telegraph 
business  are  also  under  state  management. 

But  the  Danish  peasant  is  not  a  sociahst  although 
he  works  in  harmony  with  the  radical  parties. 
The  Dane  thinks  in  terms  of  self-help.  He  rehes 
upon  himself  rather  than  upon  the  state.  He  is  a 
co-operative.  Co-operation  began  in  the  early 
eighties  with  dairying.  Prior  to  1881  each  farmer 
made  his  own  butter.  In  that  year  a  few  farmers 
got  together  and  organized  a  co-operative  daiiy. 
The  venture  proved  so  successful  that  other  farmers 
organized  similar  dairies.  To-day  there  are  1,087 
co-operative  dairies  with  a  total  membership  of 
158,000  farmers,  who  own  three-fourths  of  the  cows 
of  the  coimtry.  Nearly  95  per  cent,  of  the  farmers 
are  members  of  these  dairies,  which  shipped  nearly 


112  THE  HIGH  COST  OF  LIVING 

$1,000,000  worth  of  butter  a  week  to  England  before 
the  war. 

The  success  of  co-operation  in  dairying  induced 
the  fanners  to  build  co-operative  slaughter-houses. 
To-day  there  are  nearly  40  of  these  farmer-owned 
abattoirs,  which  slaughter  1,500,000  hogs  annually 
and  have  a  membership  of  101,0  )0.  'i'iio  raising 
of  hogs  was  greatly  stimulated  by  the  co-operative 
movement,  and  the  business  has  grown  from  23,400 
hogs  to  over  1,500,000.  Even  the  egg  business, 
which  in  many  ways  is  the  most  interesting  of  all, 
has  been  organized  along  co-operative  lines.  Al- 
most every  farmer  is  a  member  of  an  egg-collecting 
society.  The  farmer  does  not  take  his  eggs  to  the 
near-by  store  and  sell  them  for  whatever  he  can 
get.  He  sells  them  himself.  The  country  is  divided 
into  circles  or  districts.  The  egg  association  collects 
the  eggs  from  the  individual  farmers  and  takes  them 
to  the  near-by  warehouses.  Each  egg  is  stamped 
with  the  name  of  the  producer  and  the  date  of  its 
delivery,  so  that  any  complaint  may  be  traced. 
The  eggs  are  then  sent  to  Copenhagen,  where  they 
are  packed  and  classified  for  export.  In  1896  the 
egg-export  business  amounted  to  about  $2,000,000. 
By  1908  it  had  grown  to  $6,600,000.  Danish  eggs 
have  a  reputation  of  their  own.  They  are  always 
fresh  and  they  bring  high  prices. 

The  peasant  has  pushed  his  co-operative  activities 
into  other  fields.    Some  years  ago  the  middlemen 


DENMARK:  AN  EXPERIMENT  STATION     113 

controlled  the  English  market.  They  controlled  the 
bacon  industry.  So  the  farmers  organized  a  selling 
agency  of  their  own  known  as  the  Danish  Bacon 
Company  of  London.  It  immediately  destroyed  the 
meat  trust  and  in  addition  it  assured  the  farmer 
a  sure  market  for  his  produce.  Banking  is  also  a 
co-operative  undertaking.  There  are  536  co-opera- 
tive savings-banks  in  the  country  whose  deposits 
amounted  to  $208,500,000  in  1906.  The  farmer  also 
buys  at  cost.  He  buys  through  central  agencies  in 
Copenhagen,  which  then  distribute  the  commodities 
to  the  various  co-operative  selling  societies  scat- 
tered all  over  the  state.  The  farmer  buys  food  for 
his  cattle  in  this  way.  He  buys  his  machiner}^  as 
well  as  his  own  household  supplies.  A  co-operative 
store  is  to  be  found  in  every  village.  The  turn-over 
of  the  purchasing  societies  alone  in  1907  amounted 
to  $17,500,000.  The  farmer  also  buys  and  now 
manufactures  his  own  fertilizer  by  co-operation. 
There  are  peasant  canning  factories,  creameiy  sup- 
ply companies,  as  well  as  co-operative  organiza- 
tions for  the  insurance  of  live  stock  against  hail  and 
other  storms.  As  a  matter  of  fact,  there  is  scarcely 
an  activity  or  a  need  that  is  not  covered  by  one 
or  more  co-operative  associations.  And  there  is 
scarcely  a  line  of  agricultural  economy  that  is  not 
promoted  by  the  state  or  by  an  organization  de- 
signed for  this  purpose. 

Co-operation    is    another    expression    of    home- 


114  THE  HIGH  COST  OF  LIVING 

ownership.  For  the  tenant  is  rarely  a  co-operator. 
He  has  no  permanent  interest  in  his  farm.  He 
moves  from  place  to  place  and  is  interested  only 
in  getting  as  much  out  of  the  soil  as  he  can  before 
he  moves  to  another  farm. 

The  Danish  peasant  has  realized  dividends  from 
his  education,  from  home-ownership,  from  co-opera- 
tion and  the  control  of  the  state  in  his  own  interest. 
In  thirty  years'  time  the  export  trade  in  farm  prod- 
ucts has  increased  600  per  cent.,  while  the  standard 
of  living  and  the  education  and  culture  of  the  peo- 
ple has  been  raised  to  a  higher  general  average  than 
that  of  any  country  in  Europe.  The  annual  exports 
to  England  amount  to  nearly  $90,000,000,  of  which 
$51,000,000  is  in  butter,  $30,000,000  is  in  bacon, 
and  the  balance  is  in  eggs.  The  total  export  trade  of 
the  country  is  approximately  $380  for  every  farm, 
of  which  133,000  of  the  250,000  in  the  country  are 
of  less  than  13|  acres  in  extent,  the  average  of  all 
the  farms  of  Denmark  being  but  43  acres.  The  ex- 
port business  alone  amounts  to  $9  per  acre  in  addi- 
tion to  the  domestic  consumption  as  well  as  the 
support  of  the  farmer  himself. 

The  peasant  uses  the  state  in  many  other  ways. 
Commissions  are  sent  abroad  to  study  foreign  mar- 
kets and  foreign  needs.  Stock  is  bred  from  the  best 
animals.  Chickens  are  selected  for  their  qualities 
as  egg  producers.  The  soil  is  studied  and  reports 
are  made  upon  it.     Nothing  is  left  to  chance.    Ma- 


DENMARK:  AN  EXPERIMENT  STATION    115 

chinery,  too,  has  been  universally  introduced.  The 
government  grants  $100,000  a  year  to  six  expeiiment 
stations  in  breeding.  There  are,  in  addition,  over 
100  co-operative  local  experiment  stations  founded 
by  the  farmers.  Cattle,  horses,  and  hogs  are  studied 
with  as  much  care  as  is  industiy  in  other  countries. 
There  are  breeding  societies  and  other  agencies  for 
ascertaining  the  best  kind  of  Hve  stock.  And  the 
animals  are  cared  for  with  all  of  the  skill  of  veter- 
inary science.  Drastic  measures  are  taken  against 
the  foot-and-mouth  disease,  and  tuberculosis  is 
guarded  against  often  by  giving  each  cow  her  own 
drinking-vessel. 

Democracy  is  a  very  loose  term.  It  means  differ- 
ent things  in  different  countries.  But,  taking  all  of 
the  elements  into  consideration,  Denmark  is  possibly 
the  most  democratic  countiy  in  the  world.  It  is 
democratic  industrially  as  well  as  politically.  Special 
privileges  have  been  eliminated.  There  is  no  para- 
sitical class.  The  government  is  mn  by  t*he  pro- 
ducers. And  Demnark  and  Australia  are  almost 
the  only  countries  in  the  world  where  this  is  true. 
Ordinarily  the  pri\dleged  classes  are  in  control. 
And  they  legislate  in  their  own  interest  for  the  pro- 
tection of  monopoly,  special  privilege,  and  the  ad- 
vantage of  their  class.  In  Denmark,  government, 
education,  and  the  machinery  of  distribution  and 
exchange  are  in  the  hands  of  the  farmer,  who  has 
educated  himself  in  statesmanship,  in  agricultural 


116  THE   HIGH  COST  OF  LIVING 

science,  and  in  co-operative  business,  until  this  little 
state  is  almost  as  self-contained  in  its  activities  as 
was  the  market  of  a  small  town  in  New  England  a 
hundred  years  ago. 


CHAPTER  XI 

HOW  AUSTRALIA  CONTROLS  THE  FOOD 
PROBLEM 

From  the  beginning  of  the  AustraHan  settlement 
there  has  been  a  marked  tendency  toward  state  so- 
ciaHsm  and  the  control  of  property  in  the  public 
interest.  The  Australian  colonies  are,  in  fact,  the 
only  colonies  of  Anglo-Saxon  stock  that  have  aban- 
doned the  laissez-faire  philosophy  which  prevails  in 
Great  Britain,  the  United  States,  and  Canada.  The 
railroads  were  obviously  destined  to  be  owned  by 
the  state,  owing  to  the  fact  that  lines  had  to  be 
built  to  develop  the  interior  of  the  country  and  to 
open  up  the  mining  regions.  Private  capital  would 
not  imdertake  such  ventiu-es  or  was  only  availa- 
ble at  exorbitant  rates.  Even  to-day  railroads  are 
being  built  with  the  aim  of  developing  sections  of 
the  country  which  will  not  be  profitable  for  genera- 
tions. But  they  open  up  the  territory  and  justify 
themselves  in  this  way.  As  soon  as  existing  lines 
become  profitable  extensions  are  built  into  new  ter- 
ritoiy.  This  keeps  down  profits.  There  were  18,- 
653  miles  of  railway  in  the  commonwealth  in  1912, 
of  which  only  1,755  miles  were  in  private  hands. 
Of  these  nearly  one-half  were  timber  and  mining 
lines  not  open  to  the  public.     Freight  rates  and 

117 


118  THE  HIGH  COST  OF  LIVING 

passenger  fares  on  the  private  lines  are  double  and 
sometimes  treble  those  on  the  state-owned  railways, 
and  the  former  make  no  concessions  in  time  of 
emergency. 

As  in  Germany,  Denmark,  and  Switzerland,  the 
railroads  are  operated  for  the  upbuilding  of  the 
state.  As  Australia  is  primarily  an  agricultural 
nation,  the  aim  is  to  aid  the  farmers  in  every  pos- 
sible way.  An  instance  of  such  assistance  in  times 
of  stress  is  the  activities  of  the  railways  of  Victoria 
in  the  drought  of  1914,  when  they  carried  live  stock 
from  the  affected  areas  to  the  green  state  forests 
along  the  seacoast.  The  railways  also  hauled  wa- 
ter for  household  and  stock  use  to  the  dried-up 
areas.^  The  government  railways  are  equipped  with 
refrigerator-cars  and  can  accommodate  the  model 
travelHng  dairies  sent  out  by  the  state  for  the  in- 
struction of  farmers.  This  is  indicative  of  the  oper- 
ating policy.  The  railways  are  treated  as  are  the 
roads  and  highways.  They  are  means  of  communi- 
cation, not  for  profit  but  for  pubHc  service. 

New  South  Wales,  Victoria,  Queensland,  South 
Australia,  and  West  Australia  have  splendid  work- 
shops for  the  manufacture  and  repair  of  rolling-stock. 
An  instance  is  cited  in  which  the  government  shops 
at  Newport,  in  competition  with  private  works  on 
a  contract  for  engines,  bid  so  much  lower  than  the 
private  interests  that  the  latter  accused  the  man- 

*  Elwood  Mead,  in  Metropolitan  Magazine,  January,  1917. 


AUSTRALIA  AND  THE  FOOD  PROBLEM     119 

ager  of  the  government  works  of  not  knowing  his 
business.  An  official  investigation  revealed  the  fact 
that  the  Newport  bid  not  only  allowed  for  reason- 
able profit  but  might  even  have  been  made  lower 
still. ^  New  South  Wales  has  the  biggest  railway 
mileage  in  the  commonwealth,  having  one  mile 
for  each  457  people. 

All  of  the  Australian  states  and  New^  Zealand 
operate  a  number  of  agencies  to  aid  the  farmer  to 
market  his  produce.  The  railroads  are  the  chief 
means  of  promoting  agriculture  and  for  protecting 
the  farmer.  Among  these  agencies  are  commercial 
agents  to  investigate  foreign  markets.  Wharves  and 
docks  at  the  seaports  are  owned  by  many  of  the 
states,  as  are  also  ship-building  yards  and  cold- 
storage  warehouses.  Grading  of  produce  for  ex- 
port is  a  function  undertaken  by  some  of  the  states 
to  keep  the  shipper  up  to  certain  standards.  A 
careless  shipper  is  not  allowed  to  spoil  the  market 
for  the  others.    This  is  also  the  Danish  practice. 

As  a  result  of  all  these  activities  freights  have 
been  lowered  in  price  and  the  service  has  been  im- 
proved. The  Austrahan  shipper  can  send  his  butter 
12,000  miles  to  England  for  one  cent  a  pound  and 
his  fresh  meat  over  the  same  distance  for  f  of  a 
cent  a  pound.  To  send  food  from  California  to 
New  York,  one-third  the  distance,  costs  three  times 
as  much. 

^  Australia's  Awakening,  W.  G.  Spence,  452. 


120  THE  HIGH  COST  OF  LIVING 

Just  after  the  war  broke  out  Australia  found  her- 
self with  an  unusually  large  wheat  crop  on  hand 
and  an  insufficient  supply  of  vessels  to  transport  it, 
owing  to  the  withdrawal  of  steamers  from  that  part 
of  the  world.  The  government  immediately  ar- 
ranged with  the  British  Government  that  all  the 
ships  carrying  troops  to  England  should  carry  grain 
in  their  holds.  No  middleman  was  allowed  to  de- 
rive any  benefit  from  the  government  aid.  The 
government  bought  the  wheat  at  a  fixed  price  of 
75  cents  a  bushel  cash  and  is  to  pay  an  additional 
sum  when  the  sales  are  completed  and  expenses  de- 
ducted. Over  150,000,000  bushels  were  bought  by 
the  government  in  these  transactions.' 

In  1915  the  cost  of  living  rose  so  high  that  the 
govenmient  went  into  the  meat,  sheep,  and  hog 
exporting  business  to  England  in  order  to  eliminate 
the  middleman.- 

The  state  of  South  Australia  is  one  of  the  most 
advanced  in  regard  to  export  arrangements  under 
government  management.  It  handles  the  export 
business  of  the  state  by  a  produce  export  depart- 
ment which  was  established  in  1893  and  began 
working  the  following  year.  It  was  designed  pri- 
marily to  help  the  small  farmer,  who  was  practically 
unable  to  reach  the  markets  of  the  world.  The 
department  receives  produce  at  the  port  of  ship- 

1  Elwood  Mead,  Metropolitan  Magazine,  January,  1917. 
^International  Year  Book,  1915,  article  on  "Australia." 


AUSTRALIA  AND  THE  FOOD  PROBLEM     121 

ment,  usually  Port  Adelaide,  and  sells  it  in  the 
London  market.  Rates  for  freight  and  insurance 
were  so  high  on  small  shipments  that  the  small 
farmer  was  practically  excluded  no  matter  how 
great  the  demand  for  his  produce.  Only  collective 
action,  undertaken  by  the  state,  could  help  him. 
The  export  department  takes  charge  of  his  goods 
even  before  it  reaches  the  port  of  shipment;  the 
farmer  merely  delivers  to  the  nearest  railway  sta- 
tion, which  is  state  property.  The  produce  export 
department  eliminates  the  distribution,  it  being  the 
only  broker  involved,  turning  over  to  the  producer 
the  profits  that  usually  go  to  the  middleman  and 
deducting  only  the  necessaiy  cost  of  marketing. 
The  department  has  no  secrets.  Its  accounts  are 
public,  showing  every  transaction  down  to  the  last 
cent  of  receipts  and  expenditures.^ 

The  export  department  handles  perishable  goods 
and  frozen  food,  calls  for  fruit,  etc.,  at  any  railway 
station,  contracts  for  cargo  space  on  steamships, 
and  sells  the  goods  to  the  world  markets,  all  at  a 
small  charge,  which  is  about  one-half  what  the 
Tasmanians  pay  a  private  firm  for  the  same  work. 
Eggs,  poultry,  lambs,  butter,  wine,  grain,  honey, 
rabbits — anything  for  which  there  is  a  demand  or 
prospect  of  a  demand — comes  within  the  category 
of  produce  handled  by  the  department.  Live 
stock  is  slaughtered,  dressed,  frozen,  and  shipped. 

» Newest  England,  Henry  D.  Lloyd,  323,  324. 


122  THE  HIGH  COST  OF  LIVING 

Arrangements  are  made  for  pushing  and  advertising 
the  colony's  wines.^ 

Abattoirs  are  also  owned  by  the  states  or  the 
cities  as  they  are  all  over  Europe.  In  1908  slaugh- 
tering-yards were  built  at  Port  Adelaide,  with  a 
capacity  of  8,000  lambs  per  day  and  cold-storage 
facilities  for  20,000  carcasses.  The  poultiy  export 
department  did  an  interstate  trade  of  $600,000  in 
1907  in  addition  to  $100,000  worth  sent  to  New 
Zealand  and  $10,000  to  England.  In  1908  the  prof- 
its of  the  slaughtering  and  freezing  plants,  after 
allowing  all  expenses,  were  $8,700,  nearly  all  of 
which  was  on  the  refrigerator-plants.  The  com- 
modities sold  by  the  export  department  of  South 
Australia  in  1909  were  as  follows :  lamb  and  mutton, 
276,119  carcasses;  wine,  55,618  gallons;  fruit,  153,- 
904  cases;  eggs,  51,943  dozen;  honey,  95,468 
pounds;  oranges,  1,645  cases;  lemons,  400  cases; 
besides  poultry.  The  total  export  value  in  that 
year  was  $1,414,086.^ 

In  July,  1913,  the  city  of  Adelaide  opened  at 
Port  Adelaide  one  of  the  largest  and  most  extensive 
abattoirs  in  the  world.  The  total  area  of  the 
land  belonging  to  the  slaughter-houses  is  626  acres. 
"Belonging  to  the  markets  are  seventeen  large 
motor-lorries,  with  specially  constructed,  isolated 
van  bodies,  which  deliver  at  the  butchers'  shops" 

^  State  Experiments  in  Australia  and  New  Zealand,  Wm.  P.  Reeves, 
vol.  I,  p.  383. 

2  Australia's  Awakening,  W.  G.  Spence,  p.  458. 


AUSTRALIA  AND  THE  FOOD  PROBLEM     123 

on  a  time-schedule.  The  city  also  has  municipal 
cold-storage  plants.^ 

Even  in  the  early  days  of  the  produce  export 
department  the  state  proved  itself  a  good  business 
agent.  When  there  was  little  goods  for  export  it 
rented  its  cold-storage  rooms  to  butchers,  produce- 
dealers,  etc.  It  lost  money  for  a  long  time,  it  is 
true,  on  its  rabbit-sorting  and  refrigeration,  but  it 
received  indirect  returns  in  the  greater  capacity  of 
the  country  to  raise  sheep  through  the  mitigation  of 
the  rabbit  pest. 

When  stock  is  delivered  at  Port  Adelaide  and  the 
government  does  the  slaughtering  it  returns  the 
skin  and  fat  to  the  owner  but  reserves  to  itself 
the  other  by-products,  which  it  uses  scientifically. 
Even  live  poultry  is  received,  killed,  and  dressed, 
graded,  frozen,  packed,  shipped,  insured,  and  sold 
by  the  government,  and  the  amount  remitted,  all 
according  to  a  schedule  of  charges  furnished  the 
producers  in  advance. 

In  1909  the  minister  of  agriculture  estimated  that 
the  produce  export  department  had  added  $10  an 
acre  to  the  value  of  all  lands  in  South  Australia  fit 
for  growing  lambs,  butter,  wine,  or  fruit.  As  soon 
as  the  export  department  paid  4  per  cent,  on  its 
capital  the  charges  were  to  be  reduced.  Even  be- 
fore 1900  it  showed  a  profit  of  3  per  cent,  on  the 
capital  in  vested.  2 

^  The  Collectivist  State  in  the  Making,  Emil  Davies,  p.  71. 
^Newest  England,  Henry  D.  Lloyd,  pp.  325^. 


124  THE  HIGH  COST  OF  LIVING 

The  middlemen  in  South  Austraha  were  robbing 
the  farmer  of  his  dairy  profits;  so  in  September, 
1906,  the  government  started  a  dairying  estabhsh- 
ment  which  in  1909  was  turning  out  foui*  tons  of 
butter  a  week.  As  soon  as  its  success  was  demon- 
strated $375,000  more  was  appropriated  for  exten- 
sions to  the  plant.  The  butter  is  guaranteed  to  be 
first-class  and  good  prices  are  secured;  also  a  wider 
market,  owing  to  the  confidence  in  the  state  butter.* 

New  South  Wales  has  an  export  department  and 
government-owned  port  facilities  at  Sydney,  but 
up  to  1903  did  no  selling  for  its  clients  as  is  done 
in  South  Australia.  The  harbor  trust  of  Sydney 
shows  a  substantial  return  on  a  capital  invest- 
ment of  $25,725,000,  and  the  Melbourne  harbor  trust 
made  a  profit  of  $302,060  in  1908.  Both  are  state 
institutions. 

Victoria  pursues  a  similar  policy.  It  receives, 
grades,  and  ships  fiTiits,  butter,  rabbits,  tobacco,  and 
other  things.  It  represents  the  shippers  collectively 
in  making  contracts  with  steamship  companies  for 
freight,  these  contracts  including  the  use  of  refrig- 
erating-chambers.  It  arranged  for  the  first  di- 
rect steamship  communication  between  Victoria  and 
Manchester.  Even  as  early  as  1901  it  had  done  so 
much  for  the  dairy  industry  that  the  mider-secretary 
of  agriculture  was  able  to  say:  "Victoria  is  now 
the  largest  exporter  of  butter  except  Denmark." 

*  Avstralia's  Awakening,  W.  G.  Spence,  p.  459. 


AUSTRALIA  AND  THE  FOOD  PROBLEM     125 

The  government  grades  the  butter  in  its  cold-storage 
warehouses  at  Melbourne  and  packs  and  ships  it. 
At  fii'st  the  cold  storage  was  free  to  the  dairymen, 
but  later  a  charge  was  made.  In  Victoria  most  of 
the  butter  exported  is  stored  by  the  government  in 
its  refrigerator-plants.  Inferior  butter  is  marked 
"pastry  brand."'  In  the  same  way  the  poultry 
export  in  Victoria  has  been  aided,  size  and  weight 
of  shipments  being  regulated  by  the  government. 
The  government  cattle  inspectors  kill  diseased  cattle 
without  compensation  to  the  owner.  The  govern- 
ment began  experimenting  with  the  export  of  fro- 
zen rabbitS;  which  were  received  at  its  cold-storage 
chambers  and  sorted,  and  thus  turned  what  had 
been  a  pest  which  threatened  the  pastures  in  Vic- 
toria into  a  source  of  profit. 

In  New  Zealand  all  the  butter  exported  is  graded 
and  stored  in  government  refrigerator-plants.  At 
first  a  bonus  was  granted  to  dairymen  producing  a 
certain  amount  for  export,  but  after  the  trade  was 
well  established  the  bonus  was  dropped.  The 
function  of  grading  has  been  carried  on  by  the 
state  since  1896.  In  fact,  it  was  New  Zealand  that 
originated  the  system  of  grading  for  export.  It 
also  grades  for  domestic  use.  At  first  the  innova- 
tion caused  loud  complaint  as  an  interference  with 
personal  liberty,  but  it  was  soon  rightly  understood. 

1  State  Experiments  in  Australia  and  New  Zealand,  Wm.  P.  Reeves, 
vol.  I,  pp.  379,  383. 


126  THE  HIGH  COST  OF  LIVING 

This  colony  also  provides  cold-storage  facilities 
at  a  low  charge.  It  maintains  a  produce  commis- 
sioner in  London.  That  government  undertakings 
of  this  sort  are  familiar  in  New  Zealand  may  be  seen 
from  the  matter-of-fact  tone  of  the  following  news 
item  from  a  New  Zealand  paper  in  1900: 

"The  agricultural  department  has  decided  to 
make  its  first  shipment  of  poultry  to  London  in 
February.  The  department  has  arranged  to  kill 
and  dress  all  birds  sent  to  the  depots  to  be  estab- 
lished at  each  of  the  four  chief  ports,  and  it  will 
also  be  willing  to  send  them  to  the  home  market 
at  the  risk  of  the  owner.  A  small  charge  will  be 
made  for  killing,  dressing,  and  packing.  The  cost 
of  shipping  the  birds  to  London  will  be  equally 
reasonable."^ 

At  one  time  New  Zealand  products  were  under 
the  domination  of  a  shipping  ring.  In  order  to 
break  the  monopoly  the  government  threatened  to 
establish  a  line  of  its  own,  and  the  ring  was  broken. 
The  parliamentary  committee  appointed  to  investi- 
gate the  matter  even  advised  the  government  to 
look  into  the  possibilities  of  procuring  steamers  for 
conveying  coal  purchased  by  the  government  at  the 
port  of  shipment  and  the  opening  of  retail  agencies 
mider  state  control. 

The  state  of  West  Australia,  stretching  across 
the  whole  western  third  of  the  continent,  has  its  own 
steamers  for  carrying  meat  from  the  sheep-raising 

1  Newest  England,  Henry  D.  Lloyd,  p.  333. 


AUSTRALIA  AND  THE  FOOD  PROBLEM     127 

districts  of  the  north  to  the  centres  of  population  in 
the  south.  In  1913  three  of  these  steamers  were 
owned  by  the  government  of  West  Austraha.  The 
Honorable  John  Scadden,  prime  minister,  in  an  in- 
terview in  the  Ltbor  Leader  on  February  20,  1913, 
called  these  steamers  an  important  step  in  the  con- 
trol of  the  food  supply.  "Previously,"  says  Mr. 
Scadden,  "the  traffic  was  in  the  hands  of  a  com- 
bine, but  by  our  intervention  and  the  starting  of 
state  butchers'  and  grocers'  shops  we  have  effect- 
ively broken  the  back  of  the  food  and  meat  tmst 
and  have  already  reduced  the  price  of  meat  from 
one  shilling  (24  cents)  to  5  pence  (10  cents)  per 
pound,  and  soon  we  shall  have  complete  control  of 
the  coastal  shipping  service.  This  is  only  the  con- 
sistent corollary  of  the  state  ownership  of  the  rail- 
ways."* 

After  the  drought  of  1914  the  state  of  Victoria 
chartered  ships  on  which  50,000  tons  of  hay  were 
transported  from  South  America  for  the  draft  an- 
imals to  be  used  in  the  next  season's  ploughing. 
This  action  on  the  part  of  the  state  was  an  im- 
portant factor  in  producing  the  unusually  large  crop 
that  followed  the  drought.  The  state  spent  $3,- 
000,000  in  these  transactions.^ 

*  The  CoUectivist  State  in  the  Making,  Emil  Davies,  p.  33. 

*  Elwood  Mead,  Metropolitan  Magazine,  January,  1917. 


CHAPTER  XII 

OPENING    UP   THE   LAND  TO  SETTLEMENT 

The  Australian  states  and  New  Zealand  suffered 
from  oppressive  monopolies  of  various  kinds,  in- 
cluding land,  money,  and  steamships.  Tracts  of 
75,000  acres  of  fine  land,  occupied  by  a  population 
of  a  half-dozen  families,  were  not  uncommon.  In 
1891  nearly  18,000,000  acres  of  land  were  held  by 
1,615  people,  while  100,000  people  occupied  less  than 
300,000  acres.  In  1898  21,000,000  acres  out  of 
34,000,000  were  held  in  tracts  of  5,000  acres  or 
more.  Much  of  this  land  had  been  dishonestly 
acquired.  Tenancy  was  developing  of  as  bad  a 
sort  as  in  the  mother  country.  ^  Of  those  who  oc- 
cupied their  own  land  50  per  cent,  were  mortgaged 
so  heavily  that  their  interest  payments  amounted 
to  a  rack-rent.  On  the  other  hand,  the  state-built 
railroads  increased  greatly  the  value  of  some  of  the 
large  tracts  that  had  been  bought  for  a  small  sum 
in  the  early  days  of  the  colony.  Rail-lines  were 
sometimes  built  just  to  bring  the  produce  of  a  single 
big  sheep-raiser  to  market.     Public  improvements 

1  Newest  England,  Henry  D.  Lloyd,  126-133. 
128 


OPENING   UP  THE  LAND  129 

on  these  large,  isolated  tracts  still  further  increased 
their  value.  The  war  with  the  Maoris,  causing  a 
debt  of  several  million  pounds,  was  fought  merely 
to  secure  more  lands  for  the  monopolists — at  least, 
that  was  the  result.  Absentee  landlordism  flourished 
and  an  exodus  began  to  take  the  place  of  immigra- 
tion into  the  colony.  Although  New  Zealand  could 
have  supported  10,000,000  people  easily,  it  found 
itself  with  a  scarcity  of  land  for  750,000.  Companies, 
banks,  and  speculators  had  secured  control  of  the 
resources  of  the  countiy.  The  landowners,  more- 
over, had  devised  a  system  of  taxation  that  bore 
heavily  on  improvements  and  very  lightly  on  land 
values. 

The  small  farmers  were  incensed  at  having  to 
pay  more  taxes  for  eveiy  improvement  made  while 
the  great  landowners  who  made  no  improvements 
went  free.  It  is  true  that  in  1878  Sir  George  Grey 
had  introduced  the  land  tax  into  New  Zealand,  but 
it  was  soon  repealed  and  replaced  by  the  sort  of 
property  tax  the  landowners  wanted.  Neverthe- 
less, the  efforts  made  by  Grey  bore  fruit,  and  thirteen 
years  later  he  declared  New  Zealand  to  be  the  first 
country  to  have  a  fair  land  tax.^ 

The  first  step  toward  a  land  tax  was  taken  in 

1892  and  was  very  cautious.    The  legislation  of  this 

and  the  following  years  aimed  to  prevent  future 

monopoly  in  land  and  to  break  up  by  purchase, 

» N^est  England,  Henry  D.  Lloyd,  pp.  121,  134,  138. 


130  THE  HIGH  COST  OF  LIVING 

compulsory  if  necessar}^,  the  monopoly  already  ex- 
isting. The  ultimate  object  of  the  laws  was  to 
repopulate  the  large  estates  with  tenants  of  the 
state.  Underlying  the  legislation  was  the  philos- 
ophy that  land  should  be  held  only  for  use  and  for 
such  use  as  was  for  the  public  good — the  public  to 
be  the  judge  of  what  was  good.^ 

Under  the  new  laws  improvements  were  not 
wholly  exempt  from  taxation.  In  fact,  only  $15,- 
000  worth  escaped  taxation.  Land  values,  except 
in  the  case  of  small  properties,  were  taxed  after 
mortgages  had  been  subtracted.  When  the  land 
value  exceeded  $25,000  above  improvements  it  was 
subject  to  a  progressive  land  tax.^ 

In  order  to  prevent  future  monopoly,  it  was  pro- 
vided that  not  more  than  640  acres  of  the  lands 
resumed,  or  bought  back,  by  the  state  might  be 
bought  or  leased  by  one  party,  if  the  land  in  ques- 
tion was  first-class  land.  In  the  case  of  second-class 
land  a  maximum  of  2,000  acres  might  be  taken, 
and  in  the  case  of  sheep  lands,  4,000  acres.  If  the 
would-be  purchaser  already  owned  this  amount  he 
could  not  increase  his  holdings.^  Mineral  and  oil 
lands  were  reserved  to  the  state.  PubHc  lands 
might  still  be  bought  in  freehold  but  not  the  lands 
the  state  bought  back. 

Certain  restrictions  as  to  area,  improvements, 
etc.,  are  put  upon  the  resumed  lands  when  they  are 

» Idem,  p.  137.  «  j^em,  p.  116.  » Idem,  p.  138. 


OPENING  UP  THE  LAND  131 

resold,  to  prevent  monopoly  and  insure  utilization. 
If  the  purchaser  does  not  obey  these  requirements 
his  farm  will  be  taken  away.  Resumed  lands,  al- 
though not  sold  in  freehold,  are  sold  on  "lease  in 
perpetuity/'  and  everything  is  done  to  make  this 
sort  of  purchase  attractive.  Such  a  leasehold  may 
be  passed  on  by  the  farmer  to  his  children  or  may 
be  leased  by  him,  sold,  or  mortgaged,  but  it  always 
remains  under  state  restrictions  regarding  use,  the 
prohibition  of  speculation,  and  sale  to  other  specu- 
lators. The  land  may  not  be  kept  idle.  The  lease- 
holder owns  all  the  value  he  puts  into  the  ground, 
and  all  the  improvements  he  makes,  for  the  state 
guarantees  him  this  value  even  if  he  has  to  give 
up  his  lease  through  some  fault  of  his  own.  The 
whole  scheme  is  designed  to  promote  home  owner- 
ship by  poor  men,  who  can  in  this  way  get  land 
without  a  cash  payment.  Of  course,  each  appli- 
cant is  investigated  as  to  character  and  financial 
status.  He  must  have  enough  capital  to  work  the 
holding  for  a  year.  Distribution  of  the  land  to  be 
parcelled  out  is  made  by  lot. 

The  state  proceeded  cautiously  in  working  out 
the  plan.  Only  $250,000  was  asked  from  Parlia- 
ment as  the  appropriation  for  the  first  year's  pur- 
chases. Within  a  very  few  years  the  sum  appro- 
priated had  risen  to  $2,500,000  annually.  In  re- 
suming lands  small  estates  are  not  taken.  And  in 
breaking  up  the  large  estates  those  who  have  been 


132  THE  HIGH  COST  OF   LIVING 

working  on  the  land  as  laborers  are  given  the  first 
chance  to  lease  before  it  is  thrown  open  to  the 
public.^ 

The  example  of  New  Zealand  has  been  followed 
by  Queensland;  South  Australia,  West  Australia,  and 
Victoria,  each  of  which  has  enacted  laws  for  the 
resumption  of  private  lands  suitable  for  farming. 
The  laws  have  failed  in  New  South  Wales  owing  to 
the  opposition  of  the  Labor  party,  which  insisted 
that  the  plan  would  benefit  only  the  large  land- 
owners who  would  be  glad  to  unload  their  holdings 
on  the  state. 

The  Closer  Settlement  Board  of  Victoria  was  cre- 
ated for  the  purpose  of  developing  farm  colonies, 
with  an  appropriation  of  $2,500,000  annually  for 
five  years.  It  may  purchase  land  and  divide  it  into 
farms  not  to  exceed  $7,500  in  value,  agricultural 
laborers'  blocks  not  to  exceed  $1,000,  and  workmen's 
allotments  not  to  exceed  $500  in  value.  By  the  end 
of  1907  the  board  had  purchased  forty  estates, 
aggregating  207,788  acres  at  a  cost  of  $7,293,225. 
The  number  of  holdings  made  available  was  1,216. 
The  plan  has  not  been  a  very  brilliant  success,  how- 
ever, because  of  the  absence  of  a  proper  land  tax, 
so  that  the  price  of  land  has  been  too  high.  A  land 
tax  and  compulsory  purchase  are  needed  to  produce 
the  best  results.^ 

^  Newest  England,  Henry  D.  Lloyd,  pp.  139-146. 
2  Australia's  Awakening,  W.  G.  Spence,  pp.  465-466. 


OPENING  UP  THE  LAND  133 

The  Australian  states  and  New  Zealand  retain 
the  ownership  of  the  beds  of  streams  and  a  strip 
of  the  land  on  either  side.  Thus  no  community  is 
ever  in  danger  of  being  held  in  bondage  by  the 
owners  of  riparian  rights  and  much  costly  litigation 
is  avoided.^ 

Irrigation  settlement  in  Victoria  is  entirely  under 
government  control.  The  state  has  built  the  weirs, 
reservoirs,  canals,  channels,  etc.  The  water,  bed, 
and  banks  of  streams  are  exempt  from  alienation 
forever.  Fortunately  the  state  established  this 
policy  before  private  companies  had  a  chance  to 
lay  claim  to  these  lands.  West  Australia  has  car- 
ried out  a  very  large  and  successful  water-supply 
scheme  costing  nearly  $15,000,000.2 

The  Australian  theory  with  regard  to  mineral 
lands  is  that  they  belong  to  the  state  and  it  does 
not  part  with  them.  Coal  lands  are  leased,  not 
sold.  The  output  of  the  mines  is  not  taxed,  the 
state  contenting  itself  with  indirect  returns.  The 
lessee  must  fulfil  certain  requirements  in  working 
the  mines  and  must  employ  a  certain  amount  of 
labor.  He  is  not  permitted  to  hold  the  lands  idle 
until  his  neighbors  develop  the  surrounding  terri- 
tory; and  if  he  postpones  working  his  mines  he  for- 
feits his  lease.  The  state  receives  its  returns  in  the 
settlement  of  a  larger  population  in  the  district, 

^  Elwood  Mead,  Metropolitan  Magazine,  January,  1917. 
^  Victorian  Agriculture,  Thomas  Cherry,  p.  264. 


134  THE  HIGH  COST  OF  LIVING 

increased  national  wealth,  and  greater  railway  re- 
turns.* 

New  Zealand  owns  and  operates  coal-mines  and 
sawmills  in  the  state  forests.  The  state  embarked 
on  these  undertakings  recently  and  in  order  to 
break  monopoly  prices  of  coal  and  timber.^ 

All  the  states  except  Tasmania  have  some  system 
for  financial  aid  for  the  man  on  the  land.  In  South 
Australia  the  credit  agency  is  the  state  bank. 
West  Australia  has  an  agricultural  bank  and  Vic- 
toria a  Credit  Foncier.  In  1908  over  $8,000,000 
was  lent  to  the  farmers  by  these  and  other  state 
agencies. 

New  Zealand  set  up  its  advances-to-settlers  office 
in  1895  and  was  the  first  state  to  lend  money  on 
agricultural  security.  The  author  of  the  scheme 
was  Sir  Joseph  Ward,  later  minister  of  railways  in 
that  colony.  Loans  at  first  were  limited  to  a  max- 
imum of  $12,500.  The  sum  was  later  raised  to 
$15,000.  Interest  rates  were  6  per  cent.,  including 
1  per  cent,  for  amortization.^  The  plan  benefited 
the  whole  colony  except  a  small  group  of  financiers. 
The  help  to  the  farmers  was  returned  to  the  citizens 
in  the  shape  of  lower  interest  rates  for  themselves. 
The  state  never  exacts  usury,  offers  no  cut-throat 
mortgages,  charges  no  commission  and  no  fee  ex- 

^  Australia,  J.  W.  Gregory,  p.  121. 
*  Elwood  Mead,  Metropolitan  Magazine,  January,  1917. 
3  State  Experiments  in  Australia  and  New  Zealand,  Wm.  P.  Reeves, 
vol.  I,  p.  334. 


OPENING  UP  THE  LAND  135 

cept  for  actual  expenditure.  Any  amount  may  be 
borrowed,  from  $125  to  $15,000.  The  state  has 
never  foreclosed,  it  does  not  try  to  induce  the  bor- 
rower to  take  more  than  he  really  needs,  and  he  has 
usually  thirty-six  and  one-half  years  to  pay  back. 
It  advertises  widely  the  fact  that  it  is  ready  to  lend 
money  on  agricultural  security.  The  state  lends 
60  per  cent,  on  freehold  property  and  50  per  cent, 
on  leasehold  property.  By  1901  over  $9,000,000 
had  been  lent  to  settlers. 

The  South  Australian  Advances  to  Settlers  act 
was  passed  in  1896,  one  year  later  than  the  New 
Zealand  law.  The  lending  office  is  the  state  bank. 
By  1902,  after  six  years  of  operation,  the  trustees 
had  lent  $3,565,000.  The  interest  rate  is  4|  per 
cent.  The  state  bank  forced  the  bankers  to  de- 
mand lower  interest  from  the  farmers  by  competing 
with  them.  The  state  bank  of  South  Australia 
lends  money  to  the  farmer  not  only  on  his  farm  but 
also  on  his  shipments,  if  they  have  been  approved 
for  export. 

The  Victoria  law  dates  from  1896,  that  of  New 
South  Wales  from  1889.  In  the  state  of  Victoria 
4,000  families  have  been  enabled  to  secure  farms 
through  state  provision  for  aid  to  settlers  and  6,000 
workmen  have  been  provided  with  homes  in  the 
city. 

Queensland  lends  money  to  farmers  for  the  build- 
ing of  co-operative  sugar-mills.    This  has  been  done 


136  THE  HIGH  COST  OF  LIVING 

to  insure  the  working  of  the  industry  by  white  labor 
only  and  is  part  of  the  "White  AustraHa"  move- 
ment. Any  group  of  farmers  who  desire  to  begin 
the  cultivation  of  sugar  and  have  no  mill  in  the 
neighborhood  where  they  can  market  their  cane 
can  petition  to  the  government.  An  official  is  sent 
to  investigate  as  to  the  suitability  of  the  land  for 
sugar-raising  and  the  character  of  the  farmers.  The 
planters  then  incoiporate  and  make  application  for 
the  amount  needed.  The  money  is  lent  on  the 
security  of  the  mill  and  land.  The  construction 
superintendent  is  a  state  official,  and  "progress  pay- 
ments" are  made  on  the  loan  as  the  building  pro- 
ceeds. By  1899  eleven  of  these  mills  had  been 
built  and  were  paying  a  profit  averaging  9|  per 
cent.^ 

Throughout  the  continent  the  laissez-faire  theo- 
rists have  been  pretty  well  won  over  to  state  social- 
ism. Doctor  Cockburn,  minister  of  agriculture  in 
South  Australia,  once  said:  "If  you  bring  hope  into 
the  life  of  the  farmer,  and  make  him  sure  of  his  re- 
ward and  that  his  profits  will  not  be  taken  away 
from  him,  you  make  him  more  efficient.  Instead  of 
sapping  private  enterprise  we  are  assisting  private 
enterprise.  We  are  not  anxious  to  organize  patri- 
archal institutions  but  fraternal  ones."  ^ 

All  of  the  Australian  states  have  approached  the 

*  Newest  England,  Henry  D.  Lloyd,  pp.  312,  330. 
» Idem,  p.  330. 


OPENING   UP  THE   LAND  137 

food  problem  and  the  land  problem  in  much  the 
same  way.  They  have  realized  that  the  farmer  must 
be  protected  from  certain  kinds  of  monopoly  just 
to  insure  that  he  will  be  able  to  market  his  produce. 
And  the  Australian  states  have  freed  both  agricul- 
ture and  industiy  by  public  ownership  of  the  rail- 
roads, terminals,  slaughter-houses,  and  marketing 
agencies,  and  by  so  doing  have  opened  up  the  cir- 
culatory agencies  of  the  country  to  the  free  play 
of  initiative.  In  addition,  the  produce  export  de- 
partments collect,  grade,  and  provide  transporta- 
tion from  the  farmer  to  his  ultimate  destination,  thus 
insuring  the  best  possible  market  for  his  produce. 
Australia  recognizes  that  the  individual  faimer, 
12,000  miles  from  his  market,  cannot  possibly  do 
his  own  marketing  or  insist  upon  a  fair  remunera- 
tion for  his  produce.  Only  through  co-operative 
associations  or  the  state  can  this  be  secured.  And 
Australia  has  adopted  the  state  as  a  market  agency 
just  as  Denmark  has  adopted  voluntary  co-operation. 
Under  these  arrangements  the  farmer  is  assured 
of  the  best  market  available  and  full  value  for  his 
produce.  There  are  no  middlemen  between  him 
and  the  consumer,  no  gamblers,  speculators,  and 
private  storage  agencies  that  destroy  or  withhold 
food  in  order  to  force  up  prices.  The  arteries  of  the 
state  are  free  from  obstacles,  and  the  prosperity  of 
these  countries  attests  the  wisdom  of  the  policy 
pursued. 


138  THE  HIGH  COST  OF  LIVING 

In  addition,  these  distant  states  are  recognizing 
that  land,  from  which  all  wealth  ultimately  comes, 
is  designed  for  use  and  that  use  is  the  only  justifia- 
ble title  to  occupancy.  And  they  are  breaking  up 
land  monopoly  by  taxation,  by  farm  colonies,  and 
by  cheap  credit,  and  are  placing  farmers  upon  the 
soil.  Australia  has  had  the  same  experience  as  the 
United  States,  where  land  was  seized  by  monopolists 
or  acquired  at  a  few  cents  per  acre,  and,  being  prac- 
tically free  from  taxation,  was  held  for  speculation, 
for  grazing,  or  for  some  other  use  not  beneficial  to 
the  country.  To  defeat  these  monopolists  and  end 
tenancy  land  has  been  taxed  at  a  heavier  rate  than 
buildings,  while  state-aided  farm  colonies  have  peo- 
pled great  stretches  of  unoccupied  land. 

AustraUa,  hke  Denmark  and  Germany,  has  dis- 
covered that  the  state  must  play  an  important  role 
in  the  protection  of  its  producers  and  that  such 
protection  can  only  be  secured  when  certain  func- 
tions are  performed  by  the  state  itself. 


CHAPTER  XIII 
FOOD  CONTROL  IN  GERMANY 

While  England  and  the  United  States  have  en- 
deavored to  regulate  monopoly  by  penal  statutes, 
Germany,  like  Australia,  has  solved  the  problem 
through  public  ownership  of  the  distributing  agen- 
cies. And  it  is  only  through  ownership  that  the 
host  of  speculators,  middlemen,  and  forestallers  can 
be  eliminated. 

Even  before  the  war  the  more  important  agencies 
of  distribution  were  owned  by  the  empire,  the  states, 
or  the  cities.  This  has  been  the  policy  of  Germany 
especially  since  the  days  of  Bismarck.  It  is  part  of 
the  programme  of  state  socialism  which  has  made 
Germany  so  efficient  in  the  war. 

Among  the  agencies  owned  by  the  state  or  the 
cities  for  the  easy  control  of  the  food  supply  are  the 
following : 

(1)  The  railroads,  fast-freight  lines,  express  com- 
panies, and  parcel-post; 

(2)  The  slaughter-houses,  stock-yards,  and  cold- 
storage  plants; 

(3)  The  markets  in  the  cities;  and 

(4)  In  many  towns  the  wholesale  purchase  and 

sale  of  food  by  the  authorities  to  keep  down  prices 

and  eliminate  speculation. 

139 


140  THE  HIGH  COST  OF  LIVING 

The  transportation  agencies  of  Germany  have 
been  operated  by  the  state  for  a  generation.  They 
are  run  for  service  and  the  up-building  of  all  classes 
within  the  empire.  That  is  the  sole  motive  of  op- 
eration. Although  the  railroads  earn  over  $200,- 
000,000  annually  as  net  projfits,  profit  has  always 
been  secondary.  That  the  German  railroads  are 
efficient  even  the  opponents  of  public  ownership  in 
this  country  admit.  They  are  operated  to  help 
industry,  to  build  up  agriculture;  and  none  of  the 
greater  nations  have  done  as  much  for  scientific 
agriculture  as  has  Germany.  And  the  railroads 
have  contributed  greatly  to  the  ability  of  that  coun- 
try to  feed  itself.  No  one,  least  of  all  the  railway 
officials,  would  listen  for  a  moment  to  the  suggestion 
that  farm  produce  for  Hamburg,  on  the  North  Sea, 
should  be  brought  from  East  Prussia  because  it 
would  benefit  the  railroads  or  that  municipal  mar- 
kets should  not  be  started  because  it  would  injure 
the  retail  butcher  or  grocer  and  depreciate  real- 
estate  values.  Nor  w^ould  the  protest  of  private  in- 
terests against  pubUc  abattoirs  be  seriously  listened 
to  by  parliament  or  the  city  council,  nor  would  any 
limitations  on  the  size  or  kind  of  packages  that  can 
be  carried  by  parcel-post  be  permitted. 

As  a  result  of  this  policy  Hamburg  is  fed  by  farm- 
ers and  market-gardeners  round  about  Hamburg. 
Berhn  is  fed  through  the  intensive  cultivation  of 
the  land  around  Berlin.    And  every  provision  is 


FOOD  CONTROL  IN  GERMANY  141 

made  to  encourage  such  local  food  supply,  includ- 
ing even  cattle,  hogs,  and  sheep. 

The  parcel-post  is  a  marketing  agency  widely 
used  for  feeding  the  urban  population  without  the 
interv^ention  of  any  dealers  or  middlemen.  Some 
years  ago,  in  company  with  a  group  of  American 
visitors,  I  attended  a  private  dinner-party  given  by 
a  member  of  the  Reichstag  in  Berlin.  As  we  en- 
tered the  dining-room  our  hostess  pointed  to  the 
flowers  upon  the  table,  and  said:  "These  fresh 
flowers  were  brought  this  morning  by  the  postman. 
Not  only  that,  but  the  vegetables,  eggs,  butter, 
poultry,  in  fact,  all  of  the  fresh  food  for  the  dinner, 
came  by  parcel-post.  I  buy  most  of  my  supplies 
in  this  way  from  a  farmer  who  lives  many  miles 
out  in  the  country.  He  comes  to  Berlin  three  or 
four  times  a  year;  he  calls  on  all  of  his  customers, 
who  give  him  standing  orders,  which  he  fills  three  or 
four  times  a  week.  The  deliveries  are  made  in  a 
few  hours  by  parcel-post,  almost  as  fresh  as  when 
they  left  the  garden.  If  I  want  to  give  a  dinner- 
party I  send  him  a  postal  card  or  call  him  on  the 
telephone.    That  is  the  way  I  do  my  marketing." 

The  parcel-post  is  used  as  a  marketing  agency  all 
over  Germany  and  tens  of  millions  of  food  packages 
are  distributed  yearly  by  this  means.  There  are 
no  middlemen  at  all;  no  one  but  the  farmer  and  the 
Hausfrau. 

Almost  every  city,  too,  owns  its  own  slaughter- 


142  THE  HIGH  COST  OF  LIVING 

house.  All  meat  must  be  slaughtered  in  the  public 
abattoir.  There  are  no  private  packing  monopolies. 
Private  slaughtering  is  not  permitted.  All  anhnals  in- 
tended for  food  purposes  are  slaughtered  under  the 
strictest  police  and  veterinary  surveillance.  The 
whole  subject  is  covered  by  a  special  code  of  rules 
which  went  into  effect  in  1903.  The  farmers  bring 
in  their  cattle  to  the  nearest  town;  they  are  there 
examined  by  skilled  veterinaries  who  are  specially 
trained  and  examined  for  that  calling.  The  most 
humane  methods  of  killing  have  been  adopted,  while 
the  sanitary  rules  are  very  stringent.  And  instead 
of  the  slaughtering  of  meat  being  concentrated  in 
a  few  cities,  as  it  is  in  this  country,  and  under  the 
control  of  five  or  six  great  companies  organized  as 
a  trust,  there  were  in  1914  over  1,000  public  slaugh- 
ter-houses of  which  at  least  100  had  stock-yards  in 
connection  with  them.  This  was  in  a  country  about 
the  size  of  Texas  and  with  two-thirds  of  our  popula- 
tion. These  abattoirs  are  elaborate  and  costly  in- 
stitutions. Many  new  ones  have  been  built  in 
recent  years.  They  are  constructed  of  concrete  or 
brick,  are  designed  with  great  care,  and  some  of 
them  are  almost  as  artistically  planned  as  a  garden 
village.  They  are  as  clean  and  wholesome  as  con- 
stant flushings  can  make  them.  The  cities  take 
pride  in  their  slaughter-houses  as  they  do  in  their 
schools  or  other  public  structures.  In  a  report  on 
the  municipal  markets  and  slaughter-houses  in  Eu- 


FOOD  CONTROL  IN  GERMANY     143 

rope,  published  by  the  Department  of  Commerce 
and  Labor  in  1910,  we  find  the  foUovsdng  report  by 
United  States  consulates: 

"The  Barmen  estabhshment  is  a  model  of  its 
kind  and  is  modern  in  every  way  in  its  construction. 
It  was  built  in  1894  at  a  cost  of  3,500,000  marks 
($833,000).  .  .  .  The  ventilation  is  perfect  and  so 
effective  that  not  the  slightest  odor  is  noticeable. 

"The  Berlin  abattoir,  located  in  the  northern 
part  of  the  city,  was  built  in  1881  at  a  cost  of  over 
$4,250,000  and  covers  an  area  of  nearly  115  acres. 
It  is  regarded  as  one  of  the  model  institutions  of 
its  kind  in  Germany  and  one  in  which  the  most 
modern  hygienic  methods  are  used. 

"In  the  municipal  meat-inspection  department 
657  persons  were  employed,  including  one  director, 
47  veterinary  surgeons,  15  assistant  veterinaiy  sur- 
geons, 14  section  superintendents  for  the  trichina 
department,  26  assistant  superintendents,  121  male 
microscopists  and  120  female,  etc." 

Consul-General  T.  St.  John  Gaffney  describes  the 
municipal  slaughter-house  in  Dresden  as  follows: 

"Dresden  has  completed  the  erection  of  a  model 
slaughter-house  the  construction  of  which  covered 
a  period  of  four  years  and  which  cost  $4,300,000. 
There  are  68  buildings  which  are  not  only  the  largest 
from  point  of  size  but  also  the  most  modern  in  mat- 
ter of  equipment  perhaps  in  all  Europe." 

The  Dresden  abattoir  was  completed  in  1910.  It 
lies  just  outside  of  the  city.  It  is  located  on  the 
river   Elbe   and   is  connected  with   the  railroad. 


144  THE  HIGH   COST  OF  LIVING 

Live  meat  is  driveu  in  from  the  neighborhood  or 
is  brought  in  by  water  or  rail.  The  cattle,  hogs,  and 
sheep  are  either  sold  on  the  hoof  to  the  local  butcher 
or  the  meat  is  sold  at  retail  to  buyers.  The  abattoir 
is  built  of  concrete.  It  includes  a  great  cold-storage 
plant.  There  is  a  fine  hotel  and  administration 
building  attached,  and  the  entire  floor  space,  cover- 
ing about  94  acres  of  land,  is  paved  with  cement  so 
that  it  can  be  flushed  with  the  use  of  a  hose.  The 
place  is  so  clean  that  a  woman  can  walk  about  the 
place  in  the  daintiest  clothes. 

The  slaughtering  of  cattle,  like  the  transportation 
of  all  food,  is  under  exclusive  public  control.  There 
is  Uttle  chance  for  monopoly  because  combination 
is  very  diflficult.  The  farmers  and  butchers  barter 
in  the  open.  Cold-storage  facilities  can  be  rented 
by  any  one,  for  they,  too,  are  public.  There  is  thus 
no  chance  for  the  middleman.  The  price  is  fixed 
by  demand  and  supply  from  day  to  day,  with  only 
the  local  butcher  between  the  consumer  and  the 
farmer.  Moreover,  everything  is  sanitary.  One  of 
the  impelling  reasons  for  public  slaughtering  is  to 
insure  wholesome  meat. 

Here  is  another  link  in  the  chain  of  publicly  owned 
institutions  for  insuring  freedom  from  monopoly  of 
the  food  supply  of  the  nation.  And  nothing  con- 
tributes more  to  diversified  farming  and  the  local 
supply  of  meat  in  every  community  than  municipal 
abattoirs.    Every  farmer  raises  cattle,  sheep,  and 


FOOD  CONTROL  IN  GERMANY  145 

hogs.  The  farm  is  kept  in  a  high  state  of  fertility 
in  consequence,  while  the  farmer's  income  is  supple- 
mented by  the  sales  of  live  stock. 

Abattoirs  are  not  operated  for  profit.  The  fees 
charged  may  only  cover  the  cost  of  construction  and 
operation.  Over  one-third  of  the  pubHc  slaughter- 
houses of  German}^  show  profits  of  from  4  per  cent, 
to  6  per  cent,  and  one-quarter  of  them  show  profits 
of  from  6  per  cent,  to  8  per  cent. 

As  a  matter  of  fact,  the  United  States  is  the  only 
nation  in  which  private  slaughtering  is  permitted, 
with  the  possible  exceptions  of  Great  Britain  and 
Turkey.  But  even  in  Great  Britain  many  cities 
own  their  abattoirs.  Switzerland  has  possessed 
public  slaughter-houses  for  centuries,  as  have  Hol- 
land, Denmark,  Scandinavia,  the  Balkan  States, 
Austria-Hungaiy,  and  Russia.  Napoleon  compelled 
all  French  towns  to  close  their  private  slaughter- 
houses and  erect  public  ones.  And  many  of  the 
French  abattoirs  are  splendidly  constructed.  Italy 
and  Spain  have  had  public  abattoirs  since  the  Middle 
Ages,  and  in  recent  years  these  have  been  greatly 
improved.  The  Swiss,  Dutch,  and  Scandinavian 
cities  have  in  recent  years  erected  abattoirs  that  are 
comparable  to  those  in  Germany. 

The  market  is  also  a  public  institution  in  almost 
all  European  cities  and  has  been  for  centuries. 
This  still  further  prevents  speculation  in  food  sup- 
plies.    It  offers  a  place  for  the  sale  of  fresh  vegetables 


146  THE  HIGH  COST  OF  LIVING 

and  foodstuffs  of  all  kinds.  In  almost  every  Ger- 
man town  there  is  an  open  market  in  or  near  the 
public  square  which  is  used  in  the  early  morning 
and  then  cleared  away  at  nine  or  ten  o'clock.  Large 
enclosed  markets  are  also  found  in  most  of  the  cities 
in  which  vegetables,  meat,  fish,  and  other  farm  prod- 
uce are  sold.  In  Berlin  there  are  fifteen  such  mar- 
kets. These  local  market-halls  are  usually  supplied 
from  a  central  wholesale  terminal  market,  located 
upon  the  railroad,  river,  or  waterwa}^,  into  which 
food  is  brought  by  the  farmers  and  sold  at  pubhc 
auction  or  at  private  sale  to  the  retailers.  The 
municipal  markets  frequently  have  ice  plants  and 
cold-storage  plants  attached  in  which  space  can 
be  rented  as  in  a  safety-deposit  vault.  The  public 
authorities  supervise  the  markets  and  the  dealers 
to  insure  proper  prices  and  sanitary  conditions. 

In  addition  to  the  public  ownership  of  all  of  the 
agencies  for  the  handling  of  food,  price  regulation 
was  quite  common  even  before  the  war.  The  price 
of  bread  was  regulated  by  municipal  authorities. 
Food  monopolies  have  been  broken  down  in  some 
cities  by  this  process,  while  a  number  of  municipal 
bakeries  have  been  erected.  In  1910,  for  instance, 
certain  octroi  duties  or  custom  taxes  on  food  enter- 
ing the  cities,  which  had  been  imposed  by  the  im- 
perial customs  tariff  law  of  1902,  were  abolished. 
Butchers  did  not  reduce  the  price  of  meat  in  con- 
sequence, and  the  local  authorities  stepped  in  and 


FOOD  CONTROL  IN  GERMANY  147 

either  established,  or  threatened  to  estabHsh,  piibhc 
meat-markets.  The  desired  results  were  secured. 
In  Stuttgart  prices  for  meat,  uniform  for  the  whole 
city,  were  fixed  monthly  by  a  joint  committee  of 
representatives  of  the  town  council  and  the  butch- 
ers' guild. 

Some  towns  have  long  dealt  directly  in  milk  and 
other  farm  produce.  The  reason  assigned  for  the 
municipal  sale  of  milk  is  to  reduce  infant  mortality. 
Berlin  owns  dairies  on  the  municipal  irrigation  farms 
— the  same  farms  which  supply  the  city's  institu- 
tions and  poor  relief.  The  milk  is  distributed  from 
seventy  centres,  usually  schools.  Dortmund  has  a 
model  municipal  dairy  for  the  use  of  its  pubHc  in- 
stitutions. Bielefeld  subsidizes  a  co-operative  dairy- 
company  and  pro\ades  it  with  kiosks  for  the  sale  of 
milk  and  carts  to  carry  it  to  the  working-class  sec- 
tions of  the  town.  Labor  organizations  and  co- 
operative societies  sometimes  share  with  the  town 
in  the  cost  of  establishing  such  services.  The  cen- 
tral municipal  milk  depot  of  Mannheim  obtains  its 
supplies  from  co-operative  dairies. 

Leipzig,  Ulm,  Magdeburg,  and  other  cities  carry 
on  dairy-farming  and  stock-breeding  on  a  com- 
mercial basis.  The  city  of  Stuttgart  encourages 
the  formation  of  co-operative  societies  of  consumers 
for  the  purchase  of  milk  direct  from  the  producer. 
This  city  intended  at  first  to  undertake  the  busi- 
ness of  itself  distributing  milk,  but  finally  decided 


148  THE  HIGH  COST  OF  LIVING 

on  the  other  plan  as  a  compromise  method  of  elim- 
inating the  middleman. 

In  the  years  1911-12,  when  there  was  a  shortage 
of  meat  in  Germany,  many  cities  engaged  directly 
in  the  meat  business.  The  wide  administrative 
powers  possessed  by  the  cities  made  it  easy  to  do 
so,  and  the  towns  were  encouraged  in  this  action 
by  the  state  governments.  In  Prussia  the  state 
urged  the  towns  "to  take  steps  to  induce  butchers 
to  sell  meat  at  reasonable  prices  or,  failing  this,  to 
set  up  their  own  meat  depots,  to  obtain  supplies 
of  cheap  fish  and  sell  them  in  public  markets, 
and  to  insure  regular  and  abundant  suppHes  of 
vegetables  and  other  foodstuffs,  so  that  the  daily 
food  outlay  of  the  working  classes  might  be  re- 
duced." 

Encouraged  by  the  government,  over  200  towns  in 
all  parts  of  the  countiy  contracted  for  supplies  of 
foreign  meat.  The  Berlin  statistical  office  made  in- 
quiries in  1913  among  62  important  towns  and  found 
that  60  of  them,  with  a  combined  population  of  over 
15,000,000,  had  organized  their  meat  supply  in  1911 
and  1912  for  the  purpose  of  relieving  the  scarcity 
of  meat  and  moderating  its  price.  Foreign  meat  was 
purchased  in  quantities  from  Russia,  Holland,  Rou- 
mania,  and  other  countries.  Sometimes  meat  was 
sold  direct  to  the  public  and  sometimes  through 
butchers  at  prices  agreed  upon  by  the  municipal 
authorities.   The  city  of  Berlin  sold  $1,875,000  worth 


FOOD  CONTROL  IN  GERMANY  149 

of  meat  in  this  way.  The  public  got  the  meat  20 
to  30  per  cent,  cheaper  than  fresh  domestic  meat, 
yet  the  undertaking  was  carried  on  at  a  profit  in 
almost  all  cases.  Occasionally  a  town  reported 
small  losses.  A  few  towns  like  Offenbach-on-Main 
did  not  stop  with  these  measures  but  continued 
systematically  in  the  meat  business.  Offenbach 
opened  shops  and  established  a  sausage  factory. 
Other  cities  began  pig-fattenmg  and  rabbit-breeding 
on  an  extensive  scale  or  gave  financial  assistance  to 
co-operative  societies  and  individuals  who  did  so, 
on  condition  that  they  sold  a  certain  amount  of 
produce  annually  to  the  people  of  the  city.  Other 
towns  entered  upon  contracts  with  farmers'  organiza- 
tions and  chambers  of  agriculture  for  the  supply  of 
definite  quantities  of  meat  at  fixed  times. 

An  even  larger  number  of  town  councils  did  effec- 
tive work  in  reducing  the  cost  of  living  by  pur- 
chasing sea-fish  and  selling  it  practically  at  cost. 
In  the  same  way  vegetables  and  potatoes  were  sold 
at  cost  at  public  depots.^ 

Before  the  war  the  advisability  of  continuing  such 
activities  as  a  permanent  feature  of  municipal  ad- 
ministration was  a  debated  question,  although  it 
had  been  proved  conclusively  that  when  necessary 
they  could  be  carried  on  by  cities  without  loss  and 
to  the  advantage  of  large  sections  of  the  population. 

*  Dawson,  Municipal  Admirmtration  in  German  Cities,  pp.  224- 
245. 


150  THE  HIGH  COST  OF  LIVING 

As  a  matter  of  fact,  many  of  the  arrangements  de- 
vised as  temporary  relief  have  been  put  on  a  per- 
manent basis. 

When  the  war  came,  therefore,  the  groundwork 
had  been  laid  for  an  efficient  control  of  the  food 
supply.  General  measures  for  conserving  the  sup- 
ply were  under  the  control  of  the  federal  council, 
but  the  cities  did  effective  work  in  co-operating  and 
in  distributing  the  food  among  their  inhabitants  in 
accordance  with  the  new  regulations. 

Early  in  1915  all  stocks  of  wheat,  corn,  and  flour 
were  seized  by  order  of  the  federal  council,  with 
the  understanding  that  they  would  be  distributed 
among  the  cities  according  to  population.  All  busi- 
ness transactions  in  these  commodities  were  for- 
bidden from  January  26  on.  Municipalities  were 
charged  with  the  duty  of  setting  aside  suitable  sup- 
plies of  preserved  meat.  Owners  of  corn  were  to 
report  their  stocks  immediately,  which  were  requisi- 
tioned by  the  government  at  a  fixed  price.  A  gov- 
ernment distribution  office  was  established  for  the 
regulation  of  consumption  and  the  proper  distribu- 
tion of  the  stocks  among  communities.  Other 
measures  of  a  less  drastic  nature  had  been  adopted 
by  the  federal  council  previously. 

In  the  middle  of  February,  1915,  the  federal  coun- 
cil expropriated  all  the  domestic  stock  of  oats,  with 
the  exception  of  seed  oats  and  the  grain  neces- 
sary for  fodder  for  horses.    They  also  fixed  the 


FOOD  CONTROL  IN  GERMANY  151 

maximum  price  of  oats  at  $12.50  per  metric  ton. 
In  March,  1915,  the  Frankfurter  Zeitung  reported 
that  the  government  had  decided  to  seize  and  regu- 
late the  distribution  of  oil-cake  and  other  manu- 
factured fodder  in  which  it  was  said  prices  had  been 
forced  up  by  speculators.  Also  the  number  of  pigs 
in  the  country  was  to  be  reduced  from  over  25,000,- 
000  to  about  18,000,000  to  provide  a  supply  of  meat 
for  the  cities. 

In  July,  1915,  the  military  authorities  of  Bavaria 
issued  an  ordinance  providing  for  a  year's  im- 
prisonment of  any  dealer  charging  excessive  prices 
for  articles  of  daily  consumption,  including  food, 
heating,  and  lighting  substances.  A  similar  pen- 
alty was  provided  for  those  withholding  stocks  from 
sale  in  order  to  secure  higher  prices  and  for  retail- 
ers refusing  to  sell  to  intending  purchasers. 

In  regulating  the  prices  of  grain  and  fodder  the 
country  was  divided  into  four  districts  in  which 
prices  varied  according  to  local  conditions.  Corn 
prices  remained  about  the  same  as  before.  Prices 
of  rye  were  fixed  at  $55  per  ton  (220  marks)  for  the 
Berlin  district;  215  marks  for  the  eastern  district; 
230  marks  for  the  western  district.  The  price  of 
wheat  was  fixed  at  $10  above  lye,  with  an  increase 
at  a  certain  date  of  1^  marks  every  two  weeks. 
Barley  as  fodder  and  oats  were  placed  under  a  uni- 
form price  throughout  the  empire. 

The  Vienna    government   confiscated   the   1915 


152  THE  HIGH  COST  OF  LIVING 

vegetable  crop,  including  peas,  lentils,  and  beans, 
to  prevent  speculation  and  reduce  the  high  prices. 

The  city  council  of  Hamburg  appropriated  12,- 
000,000,000  marks  in  February,  1915,  with  which 
to  purchase  a  supply  of  foodstuffs,  fodder,  and  other 
articles,  that  the  city  might  be  prepared  for  even- 
tualities. A  commission  was  appointed  to  have 
charge  of  obtaining  these  stores. 

Smoked  meat  is  sold  by  the  city  of  Charlotten- 
burg  in  thirty-two  publicly  announced  places,  ac- 
cording to  the  Kommunale  Rundschau}  None  of 
this  meat  is  sold  to  butchers  or  dealers.  In  the 
thirty-two  places  designated  by  the  city  no  other 
meat  than  that  dealt  in  by  the  city  may  be  sold. 
Each  purchaser  may  obtain  a  maximum  of  only  four 
pounds,  and  the  meat  may  not  be  resold.  Prices 
are  fixed  for  the  various  kinds  of  meat.  Charlotten- 
burg  also  sells  potatoes  and  potato-fiour  through 
certain  dealers  at  fixed  prices. 

Municipal  meat  and  fish  halls  were  established  in 
Wilmersdorf  several  years  ago.  One  of  the  chief 
purposes  of  the  fish  halls  was  to  stimulate  the  use 
of  cheap  sea-fish.  The  purpose  of  the  meat  hall  was 
to  moderate  the  price  of  meat.  In  this  case  what 
was  begun  as  a  temporary  enterprise  at  a  time  of 
high  meat  prices  was  kept  as  a  permanent  institu- 
tion during  the  war. 

The  undertakings  of  the  httle  town  of  Ostrowo, 

» Issue  of  June  21,  1915. 


FOOD   COxNTROL  IN   GERMANY  153 

in  East  Prussia,  with  16,000  inhabitants,  in  the  busi- 
ness of  purveying  food  are  typical  of  what  many  of 
the  German  cities  accompHshed.  Early  in  the  war 
this  city  began  laying  in  stocks  for  its  people  in 
spite  of  its  nearness  to  the  Russian  border.  The 
city  appropriated  over  300,000  marks  to  secure  a 
supply  of  bacon,  fat,  etc.  The  money  was  appro- 
priated from  the  city  treasury.  When  the  Russian 
invasion  threatened  in  November,  1914,  the  city 
moved  a  part  of  their  stores  inland.  The  city  se- 
cured a  large  part  of  its  stocks  from  the  Central 
Purchasing  Company  in  Berlin,  in  whose  ware- 
houses the  goods  were  left  till  needed,  on  payment 
of  a  small  storage  fee.  The  food  was  sold  direct 
to  the  consumer  in  the  town  hall,  abattoir,  and  mar- 
ket hall.  Some  of  it  was  sold  through  butchers  and 
merchants  on  city  account  at  prices  fixed  by  the 
city.  Purchasers  were  restricted  to  inhabitants  of 
the  city,  partly  to  prevent  dealers  from  selling  to 
people  in  neighboring  places  at  higher  prices.  The 
city  council  also  made  agreements  with  egg-dealers 
to  purchase  eggs  at  1.40  marks  per  mandel  (16  eggs), 
to  be  delivered  by  them  every  week.  The  eggs  were 
then  sold  to  the  inhabitants  at  the  same  price.  The 
city  also  began  the  selUng  of  sea-fish  early  in  the 
war  and  kept  it  up  till  the  hot  months,  when  it 
was  discontinued  till  the  following  fall.  These  were 
sold  through  butchers  and  merchants,  who  were 
given  a  modest  commission.     The   city  also  sold 


154  THE  HIGH  COST  OF  LIVING 

fish  from  its  own  lakes.  If  bought  at  the  lake  shore 
they  were  released  at  very  low  prices.  From  all 
these  transactions  the  city  has  sustained  no  loss. 
On  the  contrary,  it  managed  to  make  money,  out  of 
which  it  bought  a  refrigerating-plant  for  the  munic- 
ipal abattoir,  with  a  capacity  for  freezing  900 
zentner  of  meat.  The  rest  of  the  profits  went  to 
poor  relief.  These  enterprises  of  the  city  have  had 
a  salutary  effect  on  the  prices  of  all  food  in  the 
town.^ 

The  difference  between  the  German  and  the 
American  method  of  controlling  prices  is  this:  Ger- 
many realizes  that  the  state  must  own  certain 
things,  such  as  railroads,  terminals,  slaughter-houses, 
etc.,  and  operate  them  for  service  so  that  the  cir- 
culatoiy  system  of  the  nation  shall  be  free  from 
private  interests;  while  we  in  the  United  States 
make  no  distinction  between  such  industries,  which 
are  natural  monopolies  and  competitive  business, 
and  cling  to  the  idea  that  competition  will  somehow 
regulate  prices.  And  when  we  discover  that  com- 
petition does  not  operate  and  that  monopoly  ap- 
propriates the  field,  we  attempt  to  regulate  the 
abuses  of  monopoly  by  fines,  imprisonments,  and 
criminal  proceedings  against  offenders.  We  create 
and  legalize  monopoly  by  the  methods  we  adopt; 
while  Germany  uses  a  surgical  operation  and  cuts 
out  the  parasitical  agencies  that  gather  around  the 

^  Kommunale  Rundschau,  October  11,  1915. 


FOOD  CONTROL  IN  GERMANY  155 

natural  monopolies.  In  consequence  the  food  sup- 
ply of  the  nation  moves  freely  in  response  to  the 
needs  of  the  people.  The  only  middleman  is  the 
government  itself. 

It  is  now  proposed  that  the  Federal  Government 
create  an  even  more  elaborate  system  of  regulation 
of  price-fixing,  etc.  But  such  a  programme  would 
require  an  army  of  men  to  regulate  the  food  sup- 
ply of  100,000,000  people.  And  cost  far  more  to 
provide  such  regulation  than  would  pay  interest 
on  the  property  of  the  packers,  of  cold-storage  and 
terminal  warehouses  all  over  the  country.  If  these 
agencies  were  owned  by  the  public  they  would  be 
self-supporting  just  as  they  are  to-day.  They  would 
cost  the  government  nothing  to  maintain.  Then 
they  would  be  open  and  public.  Conspiracies  would 
be  veiy  difficult  as  would  the  forestalling  of  food  to 
increase  the  price  artificially.  If  every  farmer, 
jobber,  and  retailer  could  place  his  own  food  in 
storage  the  law  of  demand  and  supply  would  regu- 
late prices  all  through  the  year,  just  as  it  does  for 
non-perishable  stuff,  such  as  clothing,  furniture, 
watches,  automobiles,  etc.  But  what  is  far  more  im- 
portant, with  these  agencies  in  public  hands  produc- 
tion would  be  encouraged.  Facilities  would  be  offered 
to  market  local  produce.  There  would  be  an  end 
to  the  conflict  which  now  prevails  between  the  rail- 
roads and  the  local  farmer.  And  this  conflict  is  far 
more  costly  than  speculation.    It  discourages  agri- 


156  THE  HIGH  COST  OF  LIVING 

culture  in  the  Eastern  States  and  often  ultimately 
destroys  it.  This  is  the  unseen  cost  of  private  own- 
ership in  this  field.  It  cannot  be  measured.  But 
it  is  one  of  the  prime  causes  for  the  decay  of  farm- 
ing, of  stock-raising,  of  dairying,  and  of  market- 
gardening  all  around  our  cities  and  particularly  in 
the  East. 


CHAPTER  XIV 
FROM  PRODUCER  TO  CONSUMER 

I  AM  convinced  that  America  would  be  the  cheap- 
est place  in  the  world  to  live  in  were  industry  and 
agriculture  free  from  the  many  obstacles  to  produc- 
tion and  the  many  agencies  which  take  tribute  from 
the  consumer.  There  is  land  enough ;  there  are  men 
enough;  there  is  willingness  enough  to  produce  fuel, 
food,  lumber,  and  all  of  the  necessities  and  comforts 
of  life  if  the  obstacles  that  lie  in  the  path  of  agricul- 
ture and  industry  were  swept  away,  as  has  been 
done  in  some  industries  and  as  has  been  done  to 
all  industry  to  a  greater  or  less  extent  in  other 
countries. 

\Vhat  can  be  done  to  eliminate  unnecessary  costs, 
middlemen,  speculators,  and  dealers?  How  can 
the  producer  be  brought  to  the  consumer  and  the 
farmer  be  insured  that  protection  in  the  marketing 
of  his  product  that  is  essential  if  he  is  not  to  be 
discouraged  from  producing  at  all?  Before  trying 
other  remedies,  such  as  regulation,  price-fixing,  etc., 
why  should  not  the  very  simple  expedient  be  tried 
of  freeing  industry  and  agriculture  from  the  control 
of  parasitical  agencies  and  the  laws  of  supply  and 
demand  be  given  a  chance  to  operate?  We  had 
such  freedom  up  to  the  advent  of  monopoly  in  the 
nineties   and    we  had   no    cost-of-living   problem. 

157 


158  THE  HIGH  COST  OF  LIVING 

Moreover,  this  is  the  procedure  adopted  in  the 
countries  where  the  problem  has  been  reasonably 
solved. 

What  are  the  necessary  steps  to  secure  such  free- 
dom of  production  and  distribution  in  the  food 
supply? 

(1)  Let  us  begin  at  the  farm.  It  is  obviously  im- 
possible for  each  farmer  to  find  his  own  market  in 
the  distant  city.  It  is  absurd  that  he  should  ship 
his  produce  in  broken  lots  at  excessive  freight  rates 
and  have  no  responsible  consignee  to  whom  his 
produce  can  be  sent  for  sale.  The  first  step  is  to 
organize  shipments  from  the  farm.  And  this  is  not 
difficult.  It  can  be  done  by  the  creation  of  a  State 
department  of  markets,  with  provision  for  county 
or  local  warehouses,  to  which  any  farmer  can  bring 
his  produce  and  receive  a  receipt  for  it  from  a  State 
agent  or  a  representative  of  the  farmers'  organiza- 
tion if  it  is  done  by  co-operation.  Then  the  com- 
bined consignments  of  all  of  the  farmers  can  be 
shipped  to  the  city  market  in  car-load  lots  irrespec- 
tive of  individual  ownership.  This  would  mean  a 
saving  in  freight  rates  to  the  individual.  It  would 
relieve  the  isolated  farmer  of  the  necessity  of  seeing 
his  produce  through  to  the  city,  where  in  many  in- 
stances he  is  defrauded  of  the  value  of  his  produce 
by  the  consignee  or  paid  a  nominal  price  fixed  by 
the  fictitious  sales  made  by  the  exchanges.  This  is 
the  Australian  method,  where  the  State  produce 


FROM  PRODUCER  TO  COxXSUMER        159 

export  departments  receive  the  produce  from  the 
farmer  at  the  railroad  station  and  take  it  to  the 
State-owned  terminals  on  the  seaboard,  where  it  is 
either  sold  for  domestic  use  or  is  exported  to  Eng- 
land, and  an  accounting  rendered  to  the  farmer. 

Such  a  system  of  marketing  has  also  been  worked 
out  by  the  citron-growers,  orchard-owners,  grape- 
growers,  and  wine  men  of  California.  They  have 
formed  co-operative  market  associations  which  col- 
lect, pack,  and  ship  the  produce  of  all  the  members 
to  the  Eastern  markets.  They  have  agents  or  con- 
signees in  the  cities  who  receive  and  sell  the  com- 
bined shipments  and  account  to  the  central  agency 
in  California  for  the  sales,  which  agency  in  turn 
settles  with  the  individual  members.^    This,  too,  is 

^  The  California  Fruit  Growers'  Exchange,  a  co-operative  society, 
has  been  in  existence  twenty-one  years.  It  handled  $50,000,000 
worth  of  perishable  fruits  in  1916  at  a  cost  of  1.78  per  cent,  for  bring- 
ing its  products  to  the  wholesaler  in  eastern  markets.  It  makes 
deliveries  to  2,500  wholesalers.  It  maintains  agents  all  over  the 
country  who  handle  the  products  of  the  exchange  and  dispose  of 
shipments  either  at  auction  or  by  private  sale.  There  are  no  divi- 
dends and  no  profits.  The  organization  is  managed  by  the  fruit- 
growers, and  has  cut  out  all  middlemen  except  the  local  wholesaler 
and  the  retailer.  In  1916  the  exchange  forwarded  12,000,101 
boxes  of  oranges,  lemons,  and  grapefruit,  or  67  per  cent,  of  the  total 
citrus  fruits  shipped  from  California.  As  a  result  of  its  activities 
the  citrus-fruit  growers  have  greatly  increased  their  returns  from 
the  crop.  In  addition,  losses  from  bad  debts  and  all  other  causes 
totalled  only  $102.73  in  the  year  1916.  It  cost  them  5.65  cents  per 
box,  or  1.78  per  cent,  on  the  delivery  value  of  the  fruit.  It  presented 
and  collected  from  the  railroads  claims  amounting  to  $111,557.  It 
has  accumulated  a  balance  of  $159,064,  available  for  refund  to  its 
members.  The  exchange  is  nation-wide  in  its  activities.  It  in- 
cludes a  total  of  162  shipping  associations,  and  maintains  77  sales 
offices.  About  8,000  members  are  served  by  it  on  a  co-operative, 
non-profit  basis  at  a  negligible  cost. 


160  THE  HIGH  COST  OF  LIVING 

the  plan  in  universal  use  in  Denmark  by  the  dairy- 
men, cattle  and  hog  raisers,  the  egg  and  poultry 
men,  who  collect,  pack,  ship,  and  market  directly 
to  their  customers  through  co-operative  agencies. 
Possibly  voluntary  co-operation  is  too  difficult  for 
diversified  farming  and  truck-gardening  in  this 
country.  As  an  alternative,  a  State  department  for 
collective  marketing,  such  as  is  proposed  in  New 
York,  with  county  agents  who  would  receive,  ship, 
and  sell  at  the  final  market,  is  the  best  solution. 
This  would  cut  out  the  soHcitors  for  the  city  dealers, 
it  would  reduce  the  cost  of  transportation,  and  would 
give  the  farmer  a  responsible  agent,  under  surety 
bond,  in  the  city  to  whom  he  could  look  to  sell 
and  account  for  his  shipments.^ 

(2)  In  every  large  city  there  should  be  one  or 


*  The  following  is  a  description  of  the  methods  by  which  the 
Danish  farmer  reaches  his  market  in  London.  It  was  published 
in  the  New  York  Evening  Mail: 

"Just  picture  what  goes  on  in  Denmark,  a  country  where  farmers 
are  prosperous.  Consumers  buy  cheaply,  and  there  are  no  rob- 
bers who  stand  between  them.  In  this  country  the  farmers  are 
not  prosperous,  the  consumers  do  not  buy  cheaply,  and  there  are 
robbers  between  them.  In  Denmark,  on  a  country  road  in  the 
afternoon,  one  can  see  a  man  wearing  the  cap  of  the  Farm- 
ers' Co-operative  Association  pushing  a  cart  through  the  village, 
gathering  from  each  house  a  dozen  or  two  dozen  eggs,  tubs  of  butter, 
and  packages  of  cheese.  As  he  takes  the  produce  he  stamps  the 
eggs  and  records  the  quantity  delivered  in  the  record  book  of  the 
member.  At  the  end  of  his  three  or  four  mile  trip  he  meets  a  half 
dozen  other  men  at  a  small  transfer-station  owned  by  the  co- 
operative association.  At  the  transfer-station  great  wagons  or 
trucks  are  loaded  with  the  products  brought  in  by  the  hand-carts, 
and  the  trucks  haul  their  loads  to  a  near-by  railroad-station.  At 
the  railroad-station  enough  is  concentrated  to  fill  a  railroad-car. 

"The  raib:oad-car  proceeds  to  a  seaport,  where  it  meets  scores 


FROM  PRODUCER  TO  CONSUIVIER        161 

more  large  terminal  markets  owned  by  the  State 
or  the  city.  They  should  be  located  on  the  rail- 
roads and  water-fronts.  They  should  be  built  over 
the  tracks  so  that  produce  could  be  unloaded  easily 
and  placed  in  temporary  or  permanent  storage. 
The  terminal  warehouses  should  be  operated  by  the 
department  of  markets  which  should  receive  and 
sell  consignments  from  inland  points.  These  ter- 
minal warehouses  should  be  of  adequate  size  for  all 
kinds  of  produce.  They  should  contain  cold-storage 
and  refrigerator  establishments  into  which  perish- 
able commodities  could  be  placed,  either  in  bulk  or 
in  small  compartments,  which  could  be  rented  by 
the  shipper,  by  retail  dealers,  or  by  any  individual 
consumer,  like  the  safety-deposit  boxes  of  a  trust 
company.  The  warehouse  should  be  equipped  for 
meat,  fish,  fruit,  poultry,  butter,  eggs,  vegetables, 

of  additional  cars  loaded  with  the  products  of  the  association  from 
all  parts  of  Denmark.  At  the  seaport  a  ship,  owned  or  chartered, 
is  waiting,  and  the  train-loads  of  products  are  put  aboard  and  started 
for  England.  In  England  the  ship  is  unloaded  into  the  warehouse 
of  an  EngUsh  co-operative  association  to  whom  the  Danish  asso- 
ciation has  sold.  Between  these  two  associations  the  produce  has 
been  contracted  for  on  a  sUding  scale  for  a  year  in  advance.  Be- 
tween the  farmers  of  Denmark  and  the  working  men  of  London 
there  is  no  middleman. 

"Take  out  your  note-book  and  make  a  memorandum  of  the 
middlemen  who  stand  between  the  farmers  of  Iowa  and  Wisconsin 
and  the  working  men  of  New  York  and  New  England. 

"Observe  that  the  Danish  produce  moves  in  bulk — full  carts, 
full  trucks,  full  cars,  full  ships.  That  is  the  economy  of  transporta- 
tion. Contrast  it  with  our  postmaster-general's  proposition  that 
individual  farmer  and  consumer  shall  meet  by  using  the  parcel- 
post.  He  wants  each  of  the  million  famihes  in  New  York  to  receive, 
in  separate  shipments,  one  chicken,  one  package  of  butter,  one 
dozen  eggs.     That  is  the  height  of  waste  in  transportation." 


162  THE  HIGH  COST  OF  LIVING 

and  all  kinds  of  perishable  products.  The  purpose 
of  the  warehouse  is  to  create  conditions  similar  to 
those  that  obtain  in  non-perishable  products  whose 
price  remains  the  same  throughout  the  year.  If 
storage  were  provided  for  any  one  who  desired  it 
at  a  low  rate  it  would  be  almost  impossible  for 
monopoly  to  exist,  for  monopoly  becomes  increas- 
ingly difficult  as  the  number  of  persons  engaged  in 
a  business  is  increased.  If  the  farmer,  the  buyer, 
the  wholesale  and  retail  dealer  as  well  as  the  con- 
sumer himself  were  able  to  buy  and  store  for  the 
future,  combinations  to  keep  up  price  would  be  next 
to  impossible.  Under  such  conditions  the  most 
perishable  produce  would  have  a  competitive  value, 
just  as  has  clothing,  furniture,  machinery,  dry 
goods,  or  any  other  cormnodity  whose  value  is  de- 
termined by  the  cost  of  production  rather  than  the 
abihty  of  those  who  control  it  to  effect  a  corner.^ 

The  terminal  warehouse  should  be  provided  with 
auction-rooms  for  auctioning  produce  at  public  sale 
in  bulk.  Here  daily  sales  of  consignments  could  be 
made  to  retailers  as  is  now  done  by  the  private 
consignees  in  the  large  cities.  Only,  under  existing 
conditions  the  consignees  and  auction  brokers  are 
too  often  in  collusion.  They  fix  artificial  prices  and 
work  in  co-operation  with  the  railroads,  commission- 


*  For  a  description  of  how  terminal  warehouses  owned  by  the  state 
operate  to  protect  the  farmer  and  the  buyer,  see  Chapter  XI,  on 
"How  Austraha  Controls  the  Food  Problem." 


FROM  PRODUCER  TO  CONSUMER   163 

men,  and  exchanges  to  reduce  the  return  to  the 
farmer  and  increase  it  to  the  retailer.  The  public 
auctioneer  should  be  licensed  by  the  State.  He 
should  be  under  the  supervision  of  the  department 
of  markets  and  should  be  compelled  to  give  a 
surety  bond  for  the  honest  fulfilment  of  his  duties. 
Or  the  auctioneer  could  be  a  State  official,  and  the 
expense  of  his  office  could  be  borne  by  a  small  com- 
mission on  sales,  as  has  been  done  in  New  York. 

Such  a  warehouse  and  selling  agency  under  State 
control  is  urged  by  Commissioner  Dillon  of  New 
York.  By  this  plan  all  of  the  middlemen  will  be  cut 
out  and  there  will  be  substituted  a  public  agency 
which  will  receive  the  produce  of  the  farmer  at  sta- 
tions throughout  the  State,  which  will  give  the  farmer 
credit  for  what  he  brings  in  to  the  shipping  station, 
and  then  ship  the  combined  deliveries  to  the  city 
in  car-load  lots  and  effect  a  substantial  saving  in 
freight  rates.  And  in  order  to  cut  out  the  middle- 
men he  would  have  the  State  or  city  erect  a  $3,000,- 
000  terminal  warehouse  and  wholesale  food  market, 
conveniently  located  in  the  city,  to  which  the  prod- 
uce could  be  shipped.  In  connection  with  the 
warehouse  he  would  establish  three  co-operative 
stores,  located  in  different  parts  of  New  York  City, 
to  which  retailers  and  consmners  could  go  and  pur- 
chase food  directly  from  the  farmer  through  the 
department  of  markets.  Into  the  terminal  the 
railroads  would  bring  the  produce  from  the  agencies 


164  THE  HIGH  COST  OF  LIVING 

in  the  country  districts,  where  it  would  be  stored 
or  sold  to  the  retailers.  By  this  means  the  entire 
process  of  collecting,  storage,  and  sale  would  be  un- 
der public  control  from  the  producer  to  the  retailer. 

The  marketing  of  products  through  public  agents 
in  New  York  City  was  tried  in  a  small  way  by  the 
department  of  markets  and  foods  in  1915.  One 
of  the  products  first  handled  was  peaches,  in  which 
there  was  a  particularly  large  crop.  An  agreement 
was  made  by  the  department  of  markets  with  the 
Truck  Auction  Company  to  sell  the  fruit  at  the 
receiving  terminals  daily  at  public  auction.  The 
producer  was  charged  5  per  cent,  on  the  sales,  3 
per  cent,  being  for  the  services  of  the  auction  com- 
pany and  2  per  cent,  going  to  the  department  of 
foods  and  markets  for  expenses.  The  result  was 
advantageous  to  both  the  producer  and  the  con- 
sumer. The  former  received  from  15  per  cent,  to 
25  per  cent,  more  than  he  had  previously  received 
from  the  dealers.  "The  publicity  of  the  auction 
sales  and  prices  caused  a  better  distribution  and  a 
larger  consumption  than  formerly  and  also  reduced 
the  price  to  the  consumer."  This  is  Mr.  Dillon's 
opinion  of  the  experiment. 

The  department  also  succeeded  in  raising  the  price 
which  the  farmer  received  for  his  apples  and  at  the 
same  time  reduced  what  the  consumer  paid  for  them. 
In  this  experiment  also  the  object  was  to  eliminate 
the  dealer.    The  department  announced  that  on 


FROM  PRODUCER  TO  CONSUMER    165 

market  reports  on  the  condition  of  the  crop,  $2.75 
to  $3  a  barrel  would  be  a  fair  price  for  apples  of  the 
best  grade.  This  was  the  price,  therefore,  which 
the  farmer  asked.  During  the  preceding  year,  when 
the  crop  was  smaller  and  the  export  demand  greater, 
the  farmer  had  been  receiving  only  $1.50  and  $2  a 
barrel  from  the  dealers.  As  a  result  of  the  experi- 
ment with  apples  the  consumer  bought  his  apples 
at  one-third  less  than  in  the  previous  year  despite 
the  higher  prices  received  by  the  producer.  The 
department  made  an  arrangement  with  several  of 
the  large  retail  chain  stores  by  which  they  bought 
the  apples  daily  at  auction  and  agreed  to  sell  them 
at  a  price  not  to  exceed  20  per  cent,  advance.  The 
press  gave  the  whole  matter  much  publicity,  which 
resulted  in  a  generally  lower  price  for  apples  to  the 
consumer. 

When  the  department  tried  a  similar  experiment 
with  hay  it  failed  because  the  railroads  would  not 
permit  it  to  make  sales  on  railroad  premises,  a  right 
which  they  freely  accorded  the  private  dealers. 
They  would  not  even  give  any  assurances  as  to  the 
time  of  delivery  of  the  hay,  probably  at  the  request 
of  the  dealers.  Yet  these  same  railroads,  particu- 
larly the  New  York  Central,  have  made  strenuous 
efforts  to  develop  the  handling  of  California  fruits 
to  New  York  and  equipped  an  auction-room  on 
their  premises  on  the  mere  prospect  of  getting  this 
trade.    There  is,  of  course,  greater  profit  in  the 


166  THE  HIGH  COST  OF  LIVING 

long  haul  than  in  the  short  haul  for  the  railroads. 
And  for  reasons  of  their  own  the  dealers  as  well  as 
the  railroads  prefer  long-distance  shippers.  At  any 
rate,  they  get  in  their  cars  from  Chicago,  Kansas 
City,  and  other  distant  points  to  New  York  with 
the  regularity  of  passenger-trains  and  often  much 
quicker  than  from  central  New  York  State. 

Such  a  public  terminal  would  automatically  end 
the  power  of  the  middlemen.  The  local  dealer 
would  buy  directly  from  the  farmer  through  the 
farmers'  representative  or  at  public  auction.  The 
price  of  all  commodities  dealt  in  would  be  fixed  by 
private  and  public  sales.  These  prices  could  be 
published  in  a  bulletin  printed  for  that  purpose  as 
is  done  in  some  cities.  Actual  sales  would  fix  prices 
instead  of  fictitious  quotations  by  the  egg,  butter, 
poultry,  and  other  exchanges,  which  deal  in  futures 
or  paper  sales.  It  would  be  impossible  to  deal  in 
futures  or  to  establish  a  price  months  in  advance 
for  farm  produce.  For  the  farmer  himself  would 
be  able  to  place  his  food  in  storage  if  he  so  desired. 
He  could  hold  it  for  a  month  or  for  six  months.  So 
could  the  retail  dealer.  There  would  be  no  dealings 
in  futures,  for  all  the  buyers  and  sellers  would  be 
in  active  competition  all  the  year  round,  and  the 
law  of  supply  and  demand  would  fix  the  basic 
prices  as  is  done  in  all  non-perishable  commodities. 

(3)  A  series  of  local  markets,  both  enclosed  and 
open,  should  supplement  the  central  terminal  mar- 


FROM  PRODUCER  TO  CONSUMER        167 

kets.  These  markets  should  be  well  located.  They 
should  be  owned  and  managed  by  the  city.  They, 
too,  should  contain  cold-storage  facihties  or  refriger- 
ator space  to  be  rented  to  stall-holders  or  retail 
merchants.  The  stall  rentals  should  be  on  a  basis 
suflScient  to  pay  maintenance  charges  and  cost  of 
operation  and  no  more.  There  should  be  public 
supervision  of  prices  and  requirements  for  their  re- 
port and  posting. 

The  success  of  local  markets  depends  on  location, 
on  size,  on  the  variety  of  produce  offered  for  sale, 
on  cleanliness  and  attractiveness  and  the  creation 
of  the  marketing  habit  among  the  people.  Local 
markets  have  existed  all  over  Europe  for  centuries. 
Many  cities  in  America  operate  markets,  and  the 
number  is  rapidly  increasing.  A  survey  of  the 
municipal  public  markets  of  the  United  States  by 
the  State  bureau  of  municipal  information  of  New 
York  in  1917  shows  that  forty-four  out  of  fifty-six 
cities  say  their  markets  are  a  success;  that  they 
tend  to  keep  down  prices;  that  they  bring  producers 
and  consumers  together;  and  that  through  the  cre- 
ation of  competition  with  retail  dealers  they  insure 
better  produce  and  render  a  real  service  to  the 
community. 

Only  a  few  American  cities  have  given  the  public 
market  a  chance.  The  Southern  cities,  especially 
Baltimore,  Washington,  Charleston,  New  Orleans, 
as  well  as  Cleveland,  have  had  markets  for  a  long 


168  THE  HIGH  COST  OF  LIVING 

period  of  time  and  have  honestly  endeavored  to 
make  them  a  success.  And  these  cities  have  materi- 
ally reduced  prices.  Retail  dealers  and  real-estate 
interests  have  prevented  markets  being  opened  at 
all  in  many  cities  or  have  prevented  them  being 
built  or  operated  in  a  manner  to  attract  customers. 
The  city  of  New  York  had  permitted  its  markets 
to  fall  into  disuse.  Population  had  shifted  away 
from  them.  During  the  early  months  of  the  Euro- 
pean War  the  advance  in  prices  led  to  the  use  of 
city-owned  open  spaces  under  the  bridge  approaches 
as  open  markets.  Representatives  of  the  city  went 
out  into  the  country  and  encouraged  the  farmers  to 
make  use  of  these  spaces  at  a  moderate  rental. 
Four  markets  were  opened  for  the  sale  of  fruits, 
vegetables,  meats,  poultry,  and  other  produce. 
Almost  overnight  these  previously  vacant  places 
became  teeming  market-places  for  rich  and  poor 
alike,  as  many  as  100,000  persons  a  day  making  use 
of  them.  Prices  immediately  fell,  and  buyers  were 
able  to  save  often  as  much  as  33^  per  cent,  on  their 
purchases.  Prices  were  also  reduced  in  the  stores 
throughout  the  city,  while  the  farmers,  who  had 
previously  had  a  very  precarious  sale  for  their  prod- 
uce, now  began  to  sell  directly  to  the  consumer  as 
had  been  the  practice  a  generation  ago.  But  the 
real-estate  owners  and  dealers  organized  a  protest 
against  the  competition  of  the  market,  and,  respond- 
ing to  this  demand,  the  city  authorities  fixed  an 


FROM  PRODUCER  TO  CONSUMER        169 

almost  prohibitive  rental  on  the  market  spaces, 
which  either  destroyed  the  markets  or  discouraged 
their  use. 

Some  years  ago  the  municipality  of  Cleveland  es- 
tablished an  open  market  for  the  sale  of  fish  by  the 
fishermen  of  Lake  Erie,  who  had  been  compelled 
to  sell  their  catch  to  the  fish  trust  which  controlled 
the  local  market.  Fish  had  been  selling  at  from  15 
to  20  cents  a  pound.  The  city  fixed  a  price  to  the 
fishermen  of  3  cents  a  pound,  the  price  they  had 
been  receiving,  and  sold  fish  directly  through  a 
committee  to  dealers  throughout  the  city  at  5  cents 
a  pound.  As  a  result  the  trust  met  the  city's  price 
while  fresh  fish  were  obtainable  instead  of  storage 
fish  which  had  been  under  refrigeration  for  months. 

Fish  should  be  the  cheapest  of  food  on  the  sea- 
board cities.  Yet  the  sale  of  fish  is  almost  com- 
pletely in  the  hands  of  combinations  or  trusts,  which 
control  the  price  paid  the  fishermen  and  the  price 
as  well  as  the  quality  of  fish  that  the  local  dealer 
can  buy.  As  a  result,  fish  for  which  the  fisherman 
receives  3  cents  a  pound  at  the  wharves  is  sold  a  few 
blocks  away  at  from  15  to  20  cents.  Yet  the  city 
could  easily  end  this  monopoly  by  the  opening  of 
fish  wharves  to  which  the  fishermen  could  bring 
their  catch  daily  and  sell  at  retail  or  at  auction, 
as  is  done  all  over  Europe  where  fish  is  the  universal 
food  of  the  poor. 

The  city  of  Baltimore,  with  its  three  big  munic- 


170  THE  HIGH  COST  OF  LIVING 

ipal  markets,  has  reduced  the  price  of  a  number  of 
articles  of  food.  On  June  22,  1917,  fresh  eggs  were 
selling  there  at  36  cents  a  dozen,  as  compared  with 
48  cents  in  New  York  City.  Ham  was  30  cents  a 
pound,  bacon  38  cents,  and  sirloin  steak  25  to  32 
cents.  The  reason  why  food  is  relatively  so  cheap 
in  Baltimore  is  that  the  principal  products  come 
from  within  a  hundred  miles  of  the  city.  The  mar- 
kets are  municipally  owned  and  the  rentals  are  re- 
duced to  a  minimum,  thus  making  it  attractive  for 
the  farmer  to  come  to  town  and  sell.  The  highest 
price  paid  for  a  stall  in  the  meat  section  is  $48  a 
year.  Under  the  sheds  the  prices  range  from  $24 
to  $36  per  year,  while  street  stalls  cost  only  $22  a 
year.  Farmers  who  come  in  irregularly  pay  25 
cents  a  day.  As  compared  with  these  rates,  the 
price  for  market  space  in  New  York  is  $1.50  per 
square  foot,  which  is  a  prohibitive  price  for  the 
farmer  from  the  districts  outside  the  city,  while 
the  stall-holders  pay  from  $1,500  to  $3,000  a  year. 

The  superintendent  of  city  markets  in  Baltimore 
says  that  most  markets  fail  because  the  farmers 
have  not  been  encouraged  to  come  in  and  sell  direct. 
The  markets  are  frequently  controlled  by  profit- 
making  manipulators.  The  Baltimore  markets  are 
more  than  self-supporting,  although  no  attempt  is 
made  to  derive  revenue  from  them  for  other  than 
market  purposes. 

(4)  The  meat  supply  can  never  be  controlled  save 


FROM  PRODUCER  TO  CONSUMER    171 

through  local  public  abattoirs.  Inasmuch  as  the 
Western  ranges  produce  cattle  for  the  entire  coun- 
try, the  great  packing  establishments  in  Chicago, 
Kansas  City,  Omaha,  Fort  Worth,  and  elsewhere 
should  be  operated  by  the  national  government. 
Only  by  such  ownership  can  the  cattle-grower  be 
shielded  from  the  practices  described  in  a  previous 
chapter,  and  the  consumer  be  protected  from  mo- 
nopoly prices. 

In  addition  slaughter-houses  should  be  built  and 
operated  by  individual  cities  all  over  the  country. 
This  would  encourage  the  raising  of  cattle,  hogs,  and 
sheep  by  local  farmers,  an  industry  which  has  been 
killed  by  the  railroads  and  the  great  packers  of  the 
West.  This  would  be  a  good  thing  for  both  con- 
sumer and  producer,  while  the  diversification  of 
farming  would  not  only  make  agriculture  more 
profitable,  it  would  enrich  the  farm  as  well.  More- 
over, it  is  great  waste  to  carry  live  cattle  across  the 
country  to  be  killed  and  back  across  the  country 
to  be  sold.  This  increases  the  cost;  it  insures  a 
control  of  the  industry  by  the  packers  and  owners 
of  the  refrigerator-cars  and  forces  the  local  butcher 
to  comply  with  the  terms  of  the  meat  trust,  which 
drove  the  production  of  local  beef  out  of  the  market 
a  generation  ago.  The  local  butcher  had  to  buy 
from  the  trust  or  be  put  out  of  business.  If  he  re- 
fused, the  trust  opened  a  competitive  store  and  com- 
pelled the  local  butcher  to  come  to  terms.    Public 


172  THE  HIGH  COST  OF  LIVING 

slaughtering,  too,  is  sanitary.  It  insures  meat  that 
is  free  from  disease  and  reduces  the  possibiHty  of 
combination  and  price-fixing  because  it  cuts  out 
all  operators  save  the  farmer  and  the  local  butcher. 

(5)  The  waste  in  the  delivery  of  milk  due  to  com- 
peting distributers  which  cover  the  same  territory 
is  one  explanation  of  3-cent  milk  to  the  farmer  and 
12-cent  milk  to  the  consumer.  But  even  imder  the 
present  wasteful  methods  of  distribution  it  should 
not  cost  from  three  to  four  times  as  much  to  bring 
milk  to  the  consumer  as  the  farmer  receives  for  pro- 
ducing it,  and  if  it  does,  then  the  methods  of  dis- 
tribution should  be  radically  changed  and  the  waste 
eKminated. 

Two  perfectly  feasible  plans  have  been  suggested 
for  cheapening  the  cost  of  milk.  One  is  that  the 
State  or  city  provide  receiving  stations  to  which 
milk  can  be  sent  in  bulk  from  the  country.  Here  it 
would  be  received  from  the  railroads  and  delivered 
by  public  authority  or  by  licensed  delivery  agents  to 
depots  all  over  the  city.  Such  depots  could  be 
opened  in  the  groceries,  butcher  shops,  drug-stores, 
and  even  in  the  schools,  so  that  buyers  could  pur- 
chase milk  in  bottles  from  the  depots  instead  of 
having  it  delivered. 

The  other  suggestion  is  that  the  sale  of  milk  should 
be  taken  over  by  the  city  entirely.  The  city  could 
be  divided  into  districts  and,  instead  of  a  dozen 
milk  wagons  covering  eveiy  street,  a  single  delivery 


FROM  PRODUCER  TO  CONSUMER    173 

would  suffice.  The  delivery  wagons  could  be  owned 
and  operated  by  the  city,  or  the  right  to  deliver 
could  be  granted  to  individuals  under  bond  to  the 
city  that  they  would  not  charge  more  than  a  fixed 
price;  and  the  license  should  be  revoked  if  the  agree- 
ment was  violated  or  the  milk  was  watered  or  other- 
wise depreciated.  It  is  believed  that  milk  could  be 
sold,  under  such  an  agreement,  at  from  6  to  8  cents 
a  quart  instead  of  10  or  12  cents,  which  is  the  pre- 
vailing price.  Then  the  farmer  would  be  assured  a 
permanent  market;  he  would  be  able  to  insist  upon 
a  fair  price  and  would  be  protected  in  his  dealings 
all  along  the  line.  Then  it  would  be  to  the  interest 
of  the  city  to  promote  cattle-raising  in  the  neighbor- 
hood, not  only  for  dairy  but  for  food  purposes. 
The  distributers  could  not  play  one  section  of  the 
country  against  the  other;  they  could  not  beat 
down  the  producer  by  bringing  in  milk  from  another 
territory  and,  after  having  developed  the  industry 
in  one  part  of  the  country,  play  the  producers  against 
one  another  as  was  done  during  the  milk  strike  of 
the  farmers  in  New  York  State.  When  it  is  consid- 
ered that  the  life  of  the  babies  of  the  city  depends 
on  milk,  that  it  should  be  the  commonest  of  food 
products,  it  needs  no  demonstration  that  the  city 
should  be  as  much  concerned  over  its  milk  supply 
as  it  is  over  sanitation,  cleanliness,  or  any  other 
subject  that  affects  the  life  and  well-being  of  the 
people.    But  only  by  eliminating  the  middlemen 


174  THE  HIGH  COST  OF  LIVING 

and  opening  up  a  direct  connection  between  the 
producer  and  consumer  can  the  present  monopoly 
and  high  prices  which  prevail  be  broken  down. 

(6)  This  leaves  only  the  means  of  transportation 
to  be  considered.  And  the  railroads  are  the  key  to 
the  whole  food  problem.  For  the  railroads  are  the 
main  link  in  the  chain  of  distribution.  And  they 
are  not  run  for  service  but  for  profit,  and  largest  prof- 
its are  to  be  made  from  unsocial  methods  of  admin- 
istration. This  is  the  main  reason  why  the  trans- 
portation agencies  cannot  be  left  in  private  hands. 
Moreover,  they  are  interlocked  with  so  many  other 
agencies  and  so  many  other  monopolies  that  their 
operation  by  the  government  would  automatically 
break  the  power  of  the  warehousemen,  packers,  ex- 
changes, and  other  parasites  that  live  off  the  in- 
dustry of  the  country  and  contribute  little  or  noth- 
ing to  it. 

If  the  government  is  not  willing  to  acquire  and 
operate  the  railways,  substantial  freedom  could  be 
secured  by  the  expansion  of  the  parcel-post  into  a 
food-distributing  agency  as  it  is  in  all  European 
countries.  The  government  could  acquire  express- 
cars  and  refrigerator-cars  and  cars  for  package 
freight  and  have  them  hauled  by  the  railroads  just 
as  are  the  express  and  fast-freight  cars  at  present. 
The  limits  on  the  size  and  weight  of  parcels  should 
be  abolished  and  the  post-office  become  a  distribut- 
ing agency  for  such  commodities  as  are  essential  to 


FROM  PRODUCER  TO  CONSUMER        175 

the  life  of  the  community.  Individual  farmers 
could  ship  directly  to  individual  consumers  or  re- 
tailers. They  could  thus  be  assured  of  means  of 
transportation  and  of  delivery  as  well.  Moreover, 
rates  and  charges  should  then  be  fixed  by  the  gov- 
ernment, as  they  are  in  the  parcel-post,  rather  than 
by  the  carriers,  who  have  it  in  their  power  not  only 
to  decide  what  freight  shall  be  carried  and  what 
not,  but  also  to  fix  arbitrarily  the  rates  for  carriage, 
which  in  many  instances  are  so  prohibitive  as  to 
kill  the  industry. 

With  an  unlimited  parcel-post,  local  gardening, 
the  raising  of  poultry,  eggs,  butter,  etc.,  and  their 
direct  shipment  to  market  would  become  a  possi- 
bility, as  it  was  in  the  days  when  each  farmer  drove 
to  the  near-by  town  and  sold  his  produce  to  his  own 
customers.  There  is  nothing  extraordinary  about 
such  a  proposal.  The  parcel-post  is  used  all  over 
Europe  as  a  means  of  marketing  directly  and  for 
cutting  out  of  the  middlemen. 

The  proposals  herein  suggested  merely  open  up 
the  distributing  agencies.  They  offer  a  free  means 
of  circulation  between  the  consumer  and  producer. 
They  destroy  all  of  the  useless  middlemen  and  make 
it  impossible  for  them  to  live.  They  re-establish 
conditions  that  prevailed  all  over  the  country  up 
to  a  generation  ago.  And  the  high  cost  of  living 
only  appeared  with  the  coming  of  these  agencies 
that  should  have  reduced  the  cost  of  living  and 


176  THE  HIGH  COST  OF  LIVING 

been  of  great  service  to  the  producer  as  well.  But 
instead  of  being  a  boon  to  society,  the  distribut- 
ing agencies  and  warehouses  have  become  a  burden. 
But  with  the  circulatory  system  free  and  unimpeded, 
with  the  highways  under  public  control,  with  all  of 
the  terminals  and  warehouses  operated  for  service 
rather  than  for  profit,  then  conditions  similai-  to  those 
which  prevail  in  the  making  and  sale  of  watches  and 
automobiles  would  be  established  and  the  law  of 
supply  and  demand  would  operate  on  the  produc- 
tion and  distribution  of  food  and  establish  a  price 
at  the  cost  of  production  as  it  does  in  all  other  in- 
dustries and  activities  where  free  competition  pre- 
vails. And  this  is  the  only  alternative  short  of  a 
socialization  and  government  control  of  the  whole 
subject. 


CHAPTER  XV 
OTHER  ITEMS  IN  THE  FAMILY   BUDGET 

Food  is  but  one  item  in  the  family  budget,  al- 
though it  is  the  most  important  item  so  far  as  na- 
tional vitality  is  concerned.  Yet  it  is  in  food  that 
economies  must  first  be  made.  Rent  must  be  paid 
to  avoid  eviction.  The  landlord  is  inexorable.  Fuel 
must  be  had  to  keep  from  freezing.  The  worker 
and  his  family  must  be  clothed,  and  the  bread- 
winner must  go  and  come  from  work  by  street-car 
no  matter  how  little  is  left  in  the  weekly  pay  envelope 
for  food.  So  the  worker  reduces  his  rations.  The 
investigations  made  in  many  cities  show  that  the 
change  for  the  worse  in  the  dietary  of  the  poor  dur- 
ing these  years  of  prosperity  is  of  so  serious  a  sort 
that  the  commonest  necessities  of  a  few  years  ago 
have  become  luxuries  to  millions  of  people.  Meat 
is  a  rarity,  and  only  the  cheapest  varieties  can  be 
purchased  at  all.  Eggs  at  50  cents  a  dozen  are  re- 
served for  the  sick,  and  milk  at  12  cents  a  quart  is 
doled  out  only  to  the  babies,  if  obtainable  at  all. 
The  high  cost  of  food  means  a  reduced  diet  all  around. 

The  other  items  of  first  importance  in  every  fam- 
ily budget  are  rent,  fuel,  clothing,  and  some  pro- 

177 


178  THE  HIGH  COST  OF  LIVING 

vision  for  sickness.  Rents  are  rising  and  rising 
rapidly.  The  increase  in  rents  in  New  York  during 
the  spring  of  1917  was  on  the  basis  of  10  per  cent, 
all  around.  Now,  increase  in  rents  are  primarily 
traceable  to  increasing  land  values,  and  year  by 
year  the  land  values  of  the  city  increase  with  popu- 
lation and  industry.  They  are  a  social  product. 
The  annual  increment  to  the  value  of  land  under- 
lying New  York  City  is  in  the  neighborhood  of 
$150,000,000.  The  ground-rents  of  the  average  city 
amount  to  from  $150  to  $250  a  family.  The  total 
ground-rent  in  the  city  of  New  York  is  approxi- 
mately $200,000,000.  Year  by  year  the  tribute  ex- 
acted by  the  ground-landlord  increases,  and  year 
by  year  the  standard  of  living  of  the  people  is 
reduced. 

Ground-rents  of  every  kind  are  passed  on  to  the 
consumer.  The  great  department  store  which  pays 
a  quarter  of  a  million  dollars  ground-rent  for  a  piece 
of  land  which  a  generation  ago  was  used  as  a  cow- 
pasture,  passes  the  rental  on  to  the  buyer  just  as 
the  tenement-owner  passes  it  on  to  the  tenant. 
And  rent  approximates  about  one-third  of  the 
average  worker's  income,  of  which  from  one-third 
to  one-half  goes  to  the  landowner,  who  grows 
richer  year  by  year  by  the  increase  of  population 
and  the  growth  of  society. 

Increasing  land  values  levy  tribute  on  the  worker 
and  the  consumer  at  every  turn.    They  grow  while 


THE  FAMILY  BUDGET  179 

he  sleeps.  The  value  of  the  land  underlying  a  city 
is  increased  by  every  baby  that  is  born.  At  a  hear- 
ing before  a  committee  of  the  Assembly  of  the  State 
of  New  York  during  the  winter  of  1917,  a  represen- 
tative of  the  real-estate  interests  of  New  York  City 
protested  against  any  tolerance  being  shown  the 
advocates  of  birth  control  among  the  poor,  and  gave 
as  his  reasons  for  opposing  a  bill  permitting  the  dis- 
semination of  information  that  every  baby  bom  in 
the  metropolis  added  $1,000  to  the  value  of  the 
land.  The  baby,  rich  or  poor,  was  born  into  the 
world  with  a  permanent  mortgage  on  its  efforts  of 
$50  a  year,  or  five  times  that  sum  when  he  became 
the  head  of  a  normal  family  of  five. 

Other  costs  have  gone  up.  Coal  reached  famine 
prices  in  almost  every  city  in  the  country  during 
the  winter  of  1916-17.  It  shot  up  from  $3  to 
$6,  and  even  $12  a  ton.  The  increase  probably 
averaged  from  50  to  100  per  cent,  all  over  the 
country.  In  the  city  of  New  York  coal  prices  were 
almost  prohibitive.  Yet  the  anthracite  coal-fields 
are  but  a  few  hours  away,  and  despite  the  shortage 
of  labor  many  coal  companies  reported  that  they 
had  mined  more  coal  than  in  the  preceding  year.  All 
through  the  West  the  same  was  true.  Prices  were 
doubled  and  trebled.  Factories  closed  down  for 
lack  of  fuel.  Cities  were  without  coal.  Yet  the 
Middle  West  is  underlaid  with  coal,  and  the  miners 
who  had  received  an  increase  in  wages  but  a  few 


180  THE  HIGH  COST  OF   LIVING 

months  before  called  for  a  second  conference  and 
demanded  a  further  increase  because  they  were 
unable  to  work  more  than  two  or  three  days  a  week. 
This  was  due  to  a  general  shortage  of  cars  and  the 
inability  of  many  operator  to  secure  any  cars  at 
all.  The  tribute  of  the  coal  barons  is  a  tribute  of 
land  monopoly  just  as  is  the  ground-rent  of  the 
city. 

Railway  transportation  costs  the  nation  nearly 
$4,000,000,000  a  year,  or  nearly  $200  for  every  fam- 
ily of  five.  This  is  a  burden  which  the  worker  car- 
ries. It  amounts  on  the  average  to  one-quarter  of 
the  wage  of  the  workers  of  the  country.  And 
transportation  costs  are  ultimately  paid  by  the  con- 
sumer. They  come  out  of  the  pay  envelope  of  per- 
sons of  small  means.  For  the  great  bulk  of  the 
freight  of  the  country  is  on  staple  articles  of  uni- 
versal consumption. 

The  house  in  which  the  worker  lives  pays  tribute 
to  the  lumber  trust  which  owns  or  controls  105,000,- 
000  acres  of  timber-land.  The  worker  pays  tribute 
to  the  steel  trust  for  the  apartment  in  which  he 
lives.  Food,  fuel,  rent,  lumber,  and  lumber  prod- 
ucts; all  kinds  of  clothing,  shoes,  almost  every 
article  of  universal  consumption  has  steadily  in- 
creased in  price  during  the  past  three  years  until 
the  persons  living  on  a  fixed  income,  teachers,  clerks, 
professional  men,  are  far  worse  off  than  they  were 
ten  years  ago,  while  the  millions  of  men  and  women 


THE  FAMILY  BUDGET  181 

working  for  a  wage,  and  who  have  received  even  a 
substantial  increase  in  incomes  are  relatively  poorer 
than  they  were  before.* 

Why  is  it  that  the  gains  in  wealth  creation,  the 
marvellous  inventions,  the  harnessing  of  power,  the 
increase  in  labor  productivity  more  rapid  than  in 
any  previous  age  in  history,  should  have  passed  by 
all  but  a  small  handful  of  persons?  Why  should  a 
generation  have  so  altered  conditions  that  2  per 
cent,  of  the  people  own  60  per  cent,  of  the  wealth 
of  the  country?  Why  should  the  advance  in  civili- 
zation mean  such  a  terrible  burden  to  the  great 
bulk  of  our  people  when  the  wealth  produced  each 
year  is  greater  than  the  accumulated  wealth  of  the 
United  States  but  thirty-five  years  ago?  In  1916 
we  produced  $45,000,000,000  of  wealth.  That  is 
$450  a  person,  or  $2,250  for  every  family  in  the 
coimtry.  It  is  a  sum  adequate  to  raise  a  family  in 
comfort  even  at  the  present  high  cost  of  the  neces- 
sities of  life.  The  explanation  is  not  found  in  the 
increased  cost  of  labor,  for  the  total  wages  paid  in 
the  United  States  in  1916  amounted  to  but  $5,320,- 
000,000,  or  11  per  cent,  of  the  total  wealth  produced. 
And  despite  the  increase  in  wages,  the  wealth  pro- 
duced per  man  has  increased  far  more  rapidly  than 
the  increase  in  wage.     In  fact,  it  is  a  commonplace 


^  As  shown  in  Chapter  III,  wages  have  increased  not  more  than  18 
per  cent,  during  the  past  two  years,  while  the  cost  of  Uving,  based 
upon  sixty  articles  of  universal  use,  has  gone  up  85.32  per  cent. 


182  THE  HIGH  COST  OF  LIVING 

of  experience  that  high  wages  usually  mean  low 
labor  cost.  Nor  is  the  explanation  to  be  found  in 
the  exhaustion  of  natural  resources,  or  a  demand 
far  in  excess  of  the  supply.  Some  changes  have 
taken  place  in  our  life  during  the  past  generation 
that  intercept  the  gains  which  should  have  come  to 
society  from  the  marvellous  discoveries,  inventions, 
and  increase  in  production. 

The  explanation  is  to  be  found  in  monopoly  which 
has  become  all-pervasive.  It  has  entered  into  almost 
every  industry  and  controls  almost  eveiy  necessity 
of  life.  And  an  examination  of  the  more  important 
items  in  the  family  budget  enumerated  above  shows 
that  the  control  of  the  land  and  the  natural  resources 
of  the  nation  is  the  most  important  monopoly  of 
all.  It  involves  food,  fuel,  lumber,  building  ma- 
terials, iron,  steel,  copper.  It  involves  the  land 
underlying  the  city,  the  sites  of  our  homes  whether 
we  own  or  rent  them,  whether  in  the  city  or  the 
country.  To-day  the  resources  of  America  are  un- 
der the  control  of  a  group  of  monopolies  and  trusts 
while  the  land  is  kept  out  of  use  by  the  prohibitive 
prices  at  which  it  is  held. 

Monopoly  of  natural  resources  and  with  it  the 
denial  of  opportunity  to  work  and  monopoly  of 
transportation  are  the  primary  causes  of  the  increase 
in  the  cost  of  living,  of  the  necessities  and  comforts 
of  life.  The  monopoly  of  land,  of  fuel,  timber,  and 
other  natural  products  can  be  reached  by  taxation. 


THE  FAMILY  BUDGET  183 

These  it  will  open  up  to  use  while  the  transportation 
monopoly  can  only  be  solved  by  public  ownership 
and  the  substitution  of  the  idea  of  service  in  this 
important  agency  for  the  idea  of  profits. 


CHAPTER  XVI 
FREEING  THE  HIGHWAYS  OF  THE  NATION 

I  HAVE  no  doubt  but  that  the  wealth  of  the 
country  would  be  increased  by  billions  of  dollars 
annually  if  the  railroads  were  in  public  hands. 
The  paralysis  to  our  energies  from  the  private  own- 
ership of  the  means  of  communication  cannot  be 
stated  in  figures.  But  just  as  the  freeing  of  credit 
by  the  Federal  Reserve  Act  released  the  productive 
power  of  the  country,  so  the  freeing  of  the  trans- 
portation agencies  would  have  the  same  effect. 
We  do  not  know  how  many  coal-mines  remain  un- 
opened because  there  are  no  cars  or  facilities  to 
transport  the  fuel;  we  do  not  know  how  much  oil 
and  timber  would  be  produced,  how  many  indus- 
tries would  be  awakened,  how  many  acres  of  land 
would  come  under  cultivation  if  the  country  were 
assured  of  cheap,  adequate,  and  equal  transporta- 
tion facilities. 

No  one  knows  the  productive  power  of  an  indi- 
vidual or  a  nation.  We  have  not  begun  to  approach 
it  in  any  country,  least  of  all  in  the  United  States. 
And  when  it  is  considered  that  tens  of  thousands  of 
automobiles  have  been  driven  on  their  own  power 

184 


FREEING  THE  HIGHWAYS  185 

from  Michigan  to  distant  cities,  when  tens  of  thou- 
sands of  miners  are  standing  idle  at  the  mouth  of 
the  mine,  when  whole  industries  are  shut  down  for 
lack  of  fuel,  and  building  projects  are  suspended 
because  of  the  breakdown  in  transportation,  we  get 
some  suggestion  of  the  terrible  waste  from  the 
failure,  the  inevitable  failure,  of  private  ownership 
of  the  transportation  agencies  of  the  nation. 

These  conditions  cannot  be  corrected  by  the  rail- 
roads. There  are  too  many  conflicting  interests  at 
work  to  permit  of  it  being  done.  There  are  also  so 
many  other  monopolies  interrelated  with  the  rail- 
roads that  it  is  frequently  to  the  interest  of  railway 
operators  and  directors  to  continue  these  abuses. 
They  can  only  be  ended  by  public  ownership. 

Moreover,  the  railroads  hold  the  key  to  the  high 
cost  of  living,  of  food,  fuel,  timber,  and  all  of  the 
necessities  and  comforts  of  life.  For  the  railroads 
are  interlocked  with  all  of  the  monopolies  which 
control  these  products  and  service.  They  are  in- 
terlocked with  the  refrigerator-car  companies,  pack- 
ers, warehousemen,  coal-dealers,  food  exchanges,  and 
cold-storage  warehouses;  with  the  coal-mines,  the 
lumber,  the  iron,  steel,  oil,  and  other  monopolies. 
The  power  of  these  monopolies  would  be  materially 
reduced  if  the  railroads  were  integrated  into  the 
life  of  the  nation,  and  were  free  from  the  countless 
discriminations  and  abuses  which  now  prevail. 
Food  gambhng  and  speculation  would  crumble  to 


186  THE  HIGH  COST  OF  LIVING 

the  ground  if  the  favoiitisni,  the  struggle  for  long- 
haul  traffic,  but  most  of  all  if  the  profits  from  in- 
terlocking industries  were  ended  and  the  food  and 
industrial  wealth  of  the  country  were  free  to  move 
unimpeded  from  producer  to  market. 

There  is  a  possible  alternative  to  complete  gov- 
ernment ownership  that  avoids  many  of  its  alleged 
evils  but  secures  many  of  its  advantages.  It  offers 
a  simple  means  of  relief  to  some  of  the  conditions 
referred  to.  And  that  is  through  the  expansion  of 
the  parcel-post  system  into  an  express  and  fast- 
freight  service.  This  involves  an  act  of  Congress 
or  an  executive  order  from  the  postmaster-general, 
enlarging  the  limits  as  to  the  size  and  weight  of 
packages  and  the  kind  of  freight  that  can  be  trans- 
ported, and  the  extension  of  authority  to  the  post- 
office  to  enter  the  transportation  business. 

This  proposal  could  be  quickly  set  in  motion.  It 
could  be  made  operative  in  a  few  months'  time. 
There  exist  in  the  United  States  a  large  number  of 
private  car  companies  and  fast-freight  lines  which 
own  about  225,000  cars.  They  maintain  offices, 
solicit  freight,  and  perform  a  vast  freight  business 
midway  between  the  express  companies  and  the  rail- 
roads. They  have  haulage  contracts  with  the  rail- 
roads similar  to  those  of  the  express  companies. 
There  are  thousands  of  refrigerator-cars  owned  by 
the  packing-houses,  and  flat-cars  and  coal-cars 
owned  by  private  coal  corporations. 


FREEING  THE  HIGHWAYS  187 

Here  is  a  ready-made  agency,  already  working  in 
harmony  with  the  railroads  and  well  known  to  ship- 
pers all  over  the  countiy,  that  could  be  mobihzed 
into  a  great  transportation  agency.  The  govern- 
ment could  acquire  these  cars  and  merge  them  into 
a  single  company  under  the  control  of  a  transporta- 
tion director  with  power  to  compel  their  haulage  by 
the  railroads,  under  arrangements  similar  to  those 
which  prevail  with  the  express  and  fast-freight  lines. 
No  great  administrative  reorganization  is  involved 
in  such  a  transfer.  A  central  office  in  Washington 
Hke  the  Weather  Bureau  could  collect  reports  as 
to  the  transportation  needs  of  different  sections  and 
different  industries.  It  could  organize  its  car  ser- 
vice as  a  "flying  squadron"  to  meet  these  demands. 
It  could  use  its  cars  as  the  refrigerator  companies 
now  use  their  cars,  which  are  utilized  to  their  capac- 
ity all  the  year  round  by  being  sent  where  refriger- 
ator-car service  is  most  urgently  needed.  It  could 
run  its  cars  on  any  railroad.  It  could  decide 
whether  the  transportation  of  food,  fuel,  or  other 
commodities  was  the  most  urgent.  Quite  as  im- 
portant, it  could  use  the  cars  to  their  full  working 
capacity.  To-day  a  freight-car  moves  on  an  aver- 
age only  thu'ty  miles  in  twenty-four  hours,  yet  its 
potential  service  ought  to  be  from  seventy  to  a 
hundred  miles  a  day.  Undoubtedly  the  railroads 
could  carry  a  very  much  greater  tonnage,  possibly 
double  their  present  tonnage,  if  the  motive  power 


188  THE  HIGH  COST  OF  LIVING 

and  equipment  were  mobilized  for  most  effective 
use,  and  for  use  where  most  needed  to  meet  the 
nation's  emergencies. 

There  would  be  great  economy  in  the  merging  of 
all  these  fast-freight  and  express  lines  under  govern- 
ment control;  and  a  still  greater  economy  in  the 
utilization  of  cars  to  their  full  capacity.  A  central 
authority,  thinking  of  all  the  needs  of  the  nation, 
could  determine  what  commodity  should  be  moved 
and  what  not.  It  would  send  its  ''flying  squadron" 
where  most  needed.  Perishable  commodities  could 
be  saved.  Food  shortage  could  be  prevented.  Fuel 
could  be  placed  where  it  is  needed  and  at  rates  that 
industry  could  stand.  Cars  could  be  run  full  both 
ways.  Transportation  could  be  speeded  up.  And 
freight  rates  could  be  adjusted  on  a  basis  suited  to 
the  service  performed  rather  than  to  the  arbitrary 
classification  which  now  prevails. 

The  proposal  would  involve  a  relatively  small  ex- 
penditure, for  cars  can  be  constructed  at  a  cost  of 
less  than  $1,000.  It  would  involve  little  organiza- 
tion, for  a  single  office  force  of  any  one  of  the  fast- 
freight  lines  could  handle  all  of  the  lines  involved. 
Rates  could  be  simplified.  Instead  of  a  million 
commodity  rates  a  score  would  suffice.  The  rates 
paid  to  the  railroads  for  haulage  might  be  the  same 
as  those  now  paid  by  the  fast-freight  lines.  They 
might  be  fixed  on  a  car-mile  or  a  ton-mile  basis  for 
haulage,   irrespective  of  the  contents  of  the  car. 


FREEING  THE  HIGHWAYS  189 

This  would  repay  the  railroads  for  service  rendered, 
and  they  could  not  complain.  Moreover,  and  this 
is  important,  it  would  enable  the  government  to 
classify  freight  rates  as  it  saw  fit. 

Thousands  of  offices  could  be  closed.  Possibly  the 
Post  Office  Department  need  only  increase  its  per- 
sonnel and  change  the  limits  now  imposed  on  the 
parcel-post;  for  the  parcel-post  in  some  countries 
in  Europe  will  cany  a  ton  of  coal  or  a  piano  if  the 
shipper  desires.  But  the  great  gain  would  not  be 
in  these  economies,  colossal  though  they  would 
probably  be.  The  great  advantage  would  be  in  the 
freeing  the  nation,  in  releasing  the  energies  of  the 
manufacturer  and  the  farmer,  in  making  it  possible 
to  increase  the  production  of  wealth  and  bring  about 
its  proper  distribution  unimpeded  by  the  conflict 
which  now  results  from  hundreds  of  roads  struggling 
for  their  share  of  the  traffic,  and  for  long-haul 
traffic  irrespective  of  the  requirements  of  the  nation 
as  a  whole. 

Such  an  experiment,  too,  would  incite  the  rail- 
roads to  do  their  best.  It  would  automatically 
compel  them  to  effect  economies,  to  develop  initia- 
tive, just  as  the  building  of  municipal  electric-light- 
ing plants  has  compelled  privately  owned  plants  to 
reduce  rates  and  improve  service  to  meet  the  com- 
petition which  the  community  offered. 

The  effect  of  government  competition  is  seen  by 
the  effect  of  the  parcel-post  on  the  express  companies. 


190  THE  HIGH  COST  OF  LIVING 

It  is  carrying  over  400,000,000  parcels  a  year,  al- 
though it  is  less  than  four  years  old.  It  carries  a 
4-pound  package  at  a  profit,  whereas  the  express 
service  loses  money  on  a  20-pound  package.  And 
it  delivers  these  packages  promptly  and  at  a  low 
cost.  These  400,000,000  packages  would  probably 
not  have  been  carried  at  all  by  the  express  com- 
panies, for  their  business  has  not  been  materially 
diminished  in  volume  by  the  competition  of  the 
government.  The  parcel-post  has  created  new  busi- 
ness. It  has  increased  the  wealth  produced  and 
been  of  incalculable  service  to  the  producer  and 
the  consumer. 

It  is  probably  no  exaggeration  to  say  that  the 
wealth  of  America  could  be  increased  materially, 
possibly  by  10  or  20  per  cent.,  if  those  who  pro- 
duced knew  that  they  had  at  their  command  an 
impartial,  prompt,  and  adequate  means  of  transpor- 
tation; while  the  people  of  America  might  have  the 
cost  of  living  reduced  by  a  billion  dollars  a  year 
by  the  ending  of  the  exclusive  private  control  of  the 
transportation  agencies  of  the  nation.  We  dare  not 
blink  this  situation.  We  are  kept  in  ignorance  of 
the  actual  conditions  which  prevail.  Only  the  rail- 
roads know  how  bad  it  is.  And  they  will  not  let 
the  country  know.  But  the  blockade  which  now 
exists  is  only  less  of  a  menace  to  the  success  of  the 
nation  and  the  Allied  cause  than  the  submarine 
peril.    For  it  not  only  affects  our  ability  to  supply 


FREEING  THE  HIGHWAYS  191 

ourselves  and  our  allies,  but  our  ability  to  produce 
freely  as  well.  The  circulatory  system  of  a  nation 
must  be  kept  open.  And  it  can  only  be  kept  open 
by  the  government  itself. 


CHAPTER  XVII 
THE  EMBARGO  ON  FARMING 

Up  to  the  present  we  have  been  discussing  dis- 
tribution, the  conditions  which  prevail  in  the  mar- 
keting of  food,  and  the  effect  of  the  many  monopoHes 
which  have  forced  themselves  into  this  field  on  the 
cost  of  living  as  well  as  upon  agriculture.  From 
this  point  on  we  shall  consider  production;  why 
there  is  not  more  food  produced;  why  men  do  not 
go  out  to  the  land;  why  boys  and  girls  drift  to 
the  city  with  no  compensating  drift  back  to  the 
farm.  This  is,  of  course,  the  most  important  ques- 
tion. For  the  United  States  could  feed  itself  and 
almost  feed  Europe  if  our  opportunities  were  utilized 
as  they  should  be,  or  as  they  are  in  some  parts  of 
Europe. 

Many  persons  have  come  to  the  conclusion  that 
the  decay  of  agriculture  is  inevitable,  that  we  can- 
not check  the  drift  of  people  to  the  city,  a  drift  that 
has  been  going  on  all  over  Europe  as  well.  They 
say  the  city  is  so  much  more  attractive  than  the 
comitry,  it  has  so  much  more  to  offer  that  people 
will,  of  com'se,  go  to  the  towns.  There  are  some, 
too,  who  feel  that  society  really  gains  by  the  change 
that  is  going  on.  There  can  be  little  real  life  in 
isolated  groups.    The  city  is  the  civilizing  agency, 

192 


THE  EMBARGO  ON  FARMING  193 

and  the  world  will  advance  more  rapidly  when  the 
detached  farm  is  gone  and  some  new  form  of  agricul- 
tural organization  takes  its  place.  And  such  per- 
sons believe  that  the  solution  of  farming  is  through 
wholesale  production  and  the  organization  of  agri- 
culture along  modern  industrial  lines.  The  food 
we  need  should  be  produced  by  specialization,  by 
gangs  of  men  working  as  in  great  manufacturing 
plants,  the  farms  being  operated  by  large  companies 
or  under  socialistic  or  semisocialistic  organization. 
Under  such  an  arrangement  one  farm  would  be 
devoted  exclusively  to  dairying,  another  to  the 
raising  of  poultry,  another  to  truck-gardening,  and 
the  large  estates  of  the  West  and  South  to  wheat, 
cattle,  cotton,  tobacco,  and  large-scale  plantation 
production.  It  has  been  estimated  that  with  agri- 
culture organized  as  is  industry  20,000  men  could 
feed  2,000,000  people,  and  that  millions  of  farmers 
could  be  released  to  other  lines  of  activity. 

It  is,  of  course,  a  very  wasteful  system  under 
which  men  remain  on  the  farm  all  the  year  round 
when  their  working  period  is  only  six  or  seven  months. 
There  is  also  a  waste  in  the  raising  of  diversified  crops 
on  each  farm.  It  requires  far  more  labor  per  unit 
of  production  than  would  be  necessarj'-  for  large- 
scale  production.  Moreover,  under  existing  condi- 
tions the  individual  farmer  is  unable  to  own  tractor 
ploughs,  machines  for  planting  and  harvesting,  the 
use  of  which  labor-saving  devices  would  be  possible 


194  THE  HIGH  COST  OF  LIVING 

if  farming  were  organized  as  is  industry  on  large 
units  of  land  in  which  individual  ownership  were 
merged  as  it  is  in  the  trusts  and  corporations. 

It  is  possible  that  some  such  organization  will  be 
the  ultimate  form  of  agricultm'e  when  individual 
property  has  given  way  to  collective  ownership. 
But  such  an  organization  is  a  long  way  off,  and  the 
working  out  of  such  large-scale  farming  will  only 
come  after  efforts  have  been  exhausted  to  redeem 
agriculture  along  lines  with  which  we  are  familiar. 

And  before  we  abandon  the  old  organization  of 
agriculture,  or  condemn  the  farmer  for  leaving  the 
land  we  should  be  satisfied  that  he  is  really  leaving 
the  farm  from  choice,  and  is  not  being  driven  from 
it  by  conditions  that  can  be  corrected.  And  there 
is  evidence  enough  that  men  really  want  to  be  farm- 
ers, and  that  they  will  go  to  the  land  by  millions 
if  it  is  made  reasonably  easy  and  profitable  for  them 
to  do  so.  But  they  must  have  some  hope  that  they 
will  be  able  to  make  as  decent  a  living  as  they  can 
in  the  city,  and  that  they  will  not  lose  the  results 
of  their  efforts  through  exploitation  by  the  many 
predatory  interests  that  surround  the  farmer  and 
make  agriculture  the  precarious  industry  that  it  is. 

Even  without  such  assurance  millions  of  men  re- 
main in  the  country  under  what  are  almost  intol- 
erable economic  conditions.  There  are  5,000,000 
agricultural  workers  or  farm-hands  in  the  United 
States  whose  position  is  certainly  far  from  attrac- 


THE  EMBARGO  ON  FARMING     195 

tive.  They  work  long  hours,  they  receive  relatively 
low  pay,  they  have  few  of  the  comforts  and  pleasui-es 
of  the  city.^  There  are  also  2,354,676  tenant  farm- 
ers, and  the  life  they  lead  and  the  precarious  returns 
they  receive  are  not  such  as  to  lure  men  to  farming 
or  to  retain  boys  and  girls  on  the  farm  who  have 
been  reared  in  tenant  families. 

Men  not  only  remain  on  the  farm  under  the  most 
difficult  economic  and  social  conditions,  but  three 
centuries  of  experience  proves  that  the  hunger  for 
land  is  probably  the  most  powerful  economic  mo- 
tive known  to  man.  It  is  as  operative  to-day  as 
it  was  in  the  days  of  our  grandfathers.  In  the 
years  just  before  the  European  War  several  hundred 
thousand  farmers  moved  from  Iowa,  Kansas,  Ne- 
braska, and  the  northwest  into  the  undeveloped 
regions  of  western  Canada.  They  were  drawn  by 
the  free  or  the  comparatively  cheap  land  of  a  new 
countr}^  And  it  is  free  land  that  has  been  the  at- 
traction that  has  peopled  America  from  the  begin- 
ning. It  was  this  rather  than  religious  or  political 
liberty  that  lured  the  English,  the  Scotch,  and  the 
Irish,  the  Germans  and  the  Scandinavians  to  this 
country  from  the  first  colonists  in  Massachusetts 
and  Virginia  down  to  the  pioneers  who  fiUed  in  the 
Western  prairies  after  the  Civil  War.  Generation 
by  generation  the  sons  of  settlers,  the  discontented 

^  See  Report  of  Commission  on  Industrial  Relations,  vol.  1,  p.  320, 
and  vol.  10,  pp.  9059  et.  seq. 


196  THE  HIGH  COST  OF  LIVING 

from  the  cities,  and  the  immigrants  from  Europe 
moved  westward  on  to  the  virgin  lands  awaiting 
their  settlement. 

No  hardship  was  severe  enough  to  halt  the  move- 
ment and  no  tales  of  suffering  and  privation  de- 
terred the  colonists  of  the  East  or  the  immigrant 
from  crossing  the  continent.  The  settlers  suffered 
from  cyclones  and  tornadoes.  They  lived  through 
cropless  years  in  dugouts  and  hastily  constructed 
shacks.  They  suffered  from  drought.  Their  cattle 
perished.  They  had  no  companionship  and  few 
of  the  comforts  of  life.  Their  children  had  no 
educational  opportunities;  there  was  no  means  of 
communication  and  few  visitors  relieved  the  monot- 
ony of  existence.  Yet  the  lure  of  free  land  was 
stronger  than  any  hardships.  It  filled  in  a  conti- 
nent. In  a  few  years'  time  the  great  stretches  from 
the  Mississippi  to  the  Rocky  Mountains  and  the 
Pacific  slope  were  divided  into  homesteads  and  peo- 
pled by  the  Anglo-Saxon  race.  Even  the  "Great 
American  Desert"  was  not  so  desolate  as  to  be 
able  to  defy  the  land  hunger  of  the  settler. 

Such  is  the  magnetic  power  of  the  land.  It 
defies  all  obstacles.  It  lures,  as  does  the  quest 
for  gold.  It  attracts  the  Anglo-Saxon,  the  Teu- 
ton, the  Latin,  and  the  Slav.  The  experience  of 
America  and  Australia,  the  more  recent  experience 
of  Canada,  the  peopling  of  the  reclamation  proj- 
ects, even  the  settlement  of  human  beings  in  the 


THE  EMBARGO  ON  FARMING  197 

Imperial  Valley  of  California,  where  the  heat  is 
so  terrible  that  women  can  live  there  only  a  por- 
tion of  the  year,  proves  the  hunger  of  people  for 
the  land. 

But  the  free  land  of  the  West  is  all  gone.  It  has 
passed  out  of  the  hands  of  the  government.  No 
longer  do  the  open  prairies,  unfenced  and  un- 
owned, keep  down  the  price  of  land.  No  longer 
does  a  free  homestead  to  be  had  for  the  asking  free 
the  would-be  farmer  from  the  necessity  of  being  a 
farm-hand  or  a  tenant  on  the  land  of  another.  The 
age-long  movement  of  people  toward  the  setting 
sun  came  to  an  end  about  the  close  of  the  last 
century  when  the  remaining  Indian  reservations  and 
Oklahoma,  were  thrown  ODen  to  the  landless  of  the 
earth. 

The  enclosure  of  the  public  domain  ended  the 
first  great  era  of  American  history.  It  marked  the 
close  of  an  era  in  the  history  of  the  world.  For 
the  enclosures  of  the  free  land  ended  the  freedom 
of  choice  enjoyed  by  the  city  worker,  it  ended 
the  freedom  of  choice  of  the  would-be  farmer,  in 
a  sense  it  ended  the  freedom  of  the  western  world. 
And  when  the  free  land  was  gone,  all  land  began 
to  hare  a  monopoly  price  irrespective  of  its  real 
value.  It  acquired  a  speculative  value.  No  longer 
was  land  desirable  only  because  of  its  greater  fer- 
tility or  nearness  to  the  city.  All  land  now  had  a 
scarcity  value,  a  value  due  to  the  fact  that  all  of 


198  THE  HIGH  COST  OF  LIVING 

the  land  was  privately  owTied.  Then  the  price  of 
land  began  to  rise.  It  rose  with  great  rapidity. 
A  million  incoming  immigrants  increased  the  de- 
mand, not  only  for  land,  but  for  food  as  well.  And 
this  increasing  demand  upon  a  limited  supply  af- 
fected all  land  values.  It  has  been  especially  oper- 
ative during  the  past  few  years.  Fifty  years  ago 
land  in  Iowa,  Illinois,  Kansas,  Nebraska,  and  the 
Dakotas  was  held  at  from  $3  to  $5  an  acre.  To- 
day it  is  held  at  from  $100  to  $300  an  acre.  In 
Texas  it  is  the  same.  In  California  land  which  a 
generation  ago  could  be  had  for  the  asking  is  held 
at  from  $500  to  $1,000  an  acre.  The  farming  land 
in  America  is  held  at  a  higher  price  than  it  is  in 
England.  Only  in  such  intensively  cultivated  coun- 
tries as  France,  Holland,  Belgium,  and  Denmark  is 
the  value  of  agricultural  land  equal  to  that  in  the 
central  states  of  America. 

Even  in  the  East  the  price  of  land  is  prohibitive 
to  the  would-be  farmer.  Only  by  the  most  intensive 
application  can  he  make  enough  to  keep  up  pay- 
ments and  make  a  decent  living.  Frequently  he 
loses  his  whole  investment  through  failure  to  meet 
the  charges  against  him. 

This  speculative  price  of  land  is  one  explanation 
of  the  decay  of  agriculture  and  the  failure  of  farming 
to  keep  pace  with  our  needs.  The  earth  is  closed 
against  the  would-be  farmer.  The  man  of  aver- 
age capital  is  unable  to  buy  or  to  make  a  living 


THE  EMBARGO  ON  FARMING     199 

on  the  land  at  the  price  which  he  has  to  pay 
for  it. 

The  rapidity  with  which  land  has  increased  in 
value  in  recent  years  is  indicated  by  the  census 
returns.  In  1900  the  farming  land  of  the  United 
States  had  a  value  of  $13,058,007,995.  A  decade 
later  it  was  valued  at  $28,475,674,169.  In  ten 
years'  time  farming  land  increased  in  value  by 
$15,417,666,174  or  118.1  per  cent.  The  value  of 
the  land  per  acre  increased  108.1  per  cent.  Dur- 
ing this  period  the  increase  in  farm  acreage  was 
but  4.8  per  cent.,  and  the  number  of  persons  en- 
gaged in  agriculture  but  11.2  per  cent.  The  in- 
crease in  the  value  of  agricultural  land  was  not 
the  result  of  increasing  acreage  under  cultivation, 
nor  yet  in  the  number  of  farmers.  The  increased 
value  was  a  monopoly  value,  due  to  the  enclosure 
of  the  free  land,  and  the  increasing  pressure  of 
population  upon  the  soil.  It  is  an  "unearned  in- 
crement," a  social  value  due  to  the  necessities  of 
society  and  the  increase  of  population. 

The  cheap  land  of  our  fathers  has  disappeared 
just  as  the  free  land  of  our  grandfathers  disappeared 
a  generation  earlier.  And  dear  land  places  an  em- 
bargo on  farming.  It  explains  the  drift  to  the 
city.  It  drives  the  sons  of  farmers  away  from  the 
country.  They  cannot  buy  land.  It  is  held  at  a 
price  beyond  its  economic  value.  And  men  are 
unwiDing  to  become  tenants  or  agricultural  laborers 


200  THE  HIGH  COST  OF  LIVING 

when  they  can  make  more  money  and  enjoy  greater 
comforts  in  the  city. 

This  is  one  obstacle  to  agriculture.  This  is  one 
explanation  of  why  we  do  not  produce  more  food. 
The  earth  is  closed  against  labor. 

Men  in  the  mass  are  always  trying  to  satisfy  their 
needs  along  lines  that  are  easiest.  By  something 
like  telepathy  they  know  of  the  avenues  of  effort 
that  are  most  remunerative  even  when  those  op- 
portunities are  in  far-away  Alaska.  And  the  end 
of  the  centuries-long  movement  to  the  land,  which 
has  been  going  on  since  the  discovery  of  America, 
is  not  wholly  due  to  the  attractiveness  of  the  city 
or  its  comforts  and  pleasures;  it  is  due  rather  to 
the  fact  that  the  land  is  now  closed  against  the 
worker  by  the  speculative  prices  that  act  as  an  em- 
bargo against  him. 


CHAPTER  XVIII 
LAND  FOR  THE   LANDLESS 

Not  only  is  the  would-be  farmer  excluded  from 
the  land  by  prohibitive  prices,  but  hundreds  of 
millions  of  acres  are  held  in  great  estates,  while 
over  400,000,000  acres  of  land  enclosed  in  farms 
is  not  under  cultivation  at  all.  This  is  particularly 
true  of  the  West  and  South  where  vast  manorial 
domains  of  tens  of  thousands  and  even  millions 
of  acres  are  held  by  individuals  and  corporations. 
While  food  has  almost  reached  famine  prices  to 
the  poor,  while  milHons  of  people  are  herded  in 
tenements  and  about  the  great  industries,  while 
humdreds  of  thousands  of  farmers  have  migrated 
to  Canada  and  nearly  40  per  cent,  of  our  6,000,000 
farmers  are  tenants,  there  exists  in  this  country 
land  enough,  if  converted  into  moderate-sized  farms, 
to  provide  comfortable  homes  for  at  least  30,000,000 
people. 

And  if  the  land  were  cultivated  as  it  is  in  France, 
Denmark,  Switzerland,  and  Belgium  there  is  prac- 
tically no  limit  to  the  millions  who  would  find  a 
free  and  adequate  livelihood  from  the  land.  For 
the  United  States  is  peopled  at  but  30  persons  to 

201 


202  THE  HIGH  COST  OF  LIVING 

the  square  mile,  while  in  a  number  of  countries  in 
Europe,  where  the  soil  is  no  more  fertile  than  it  is 
here,  ten  times  as  many  people  live. 

We  are  familiar  with  the  feudal  ownership  of 
land  in  Europe  and  the  great  estates  of  the  old 
aristocracy  in  Russia,  England,  Germany,  and 
Austria-Hungary.  Our  indignation  has  been 
aroused  over  the  rack-rented  tenants  of  Ireland 
who,  to  the  number  of  millions,  were  driven  to 
America  by  the  oppressions  of  English  landlords. 
Great  Britain  is  divided  into  great  estates,  owned 
by  the  aristocracy,  from  which  the  people  have 
been  driven  into  the  cities,  in  which  four-fifths  of 
the  population  now  dwell.  Persons  of  Scotch  de- 
scent in  this  country  remember  the  stories  of  the 
enclosures  of  the  land  of  Scotland  by  the  aristoc- 
racy, of  how  the  peasants  were  sent  from  the  homes 
their  ancestors  had  held  for  centuries,  of  how  they 
had  been  driven  almost  into  the  sea,  and  how  hun- 
dreds of  thousands  of  them  came  to  America  to  es- 
cape the  oppressions  of  the  landowning  class.  Yet, 
while  we  are  familiar  with  these  conditions  in  Europe, 
few  people  realize  that  a  feudalism  has  come  into 
existence  in  the  United  States  similar  to  that  which 
still  prevails  in  a  great  part  of  Europe,  a  system 
which,  up  to  the  French  Revolution,  was  the  pre- 
vailing method  of  landownership  in  all  of  the  Euro- 
pean countries.  Some  American  States,  in  fact,  are 
more  closely  owned  than  are  any  of  the  nations  of 


LAND  FOR  THE  LANDLESS  203 

Europe,  with  the  possible  exception  of  Russia.  And 
the  condition  of  the  tenant  farmer  working  upon 
the  great  plantations  of  Texas,  Oklahoma,  and  many 
of  the  Southern  States  is  but  slightly  better  than 
the  condition  of  the  Irish  tenants  who  were  driven 
to  this  country  in  the  hungry  forties  to  escape 
starvation.^ 

The  most  unfortunate  page  in  our  history  is  the 
story  of  the  wastage  of  our  public  domain.  It 
amounted  originally  to  1,850,000,000  acres.  It 
cost  us  less  than  five  cents  an  acre.  The  great 
bulk  of  this  imperial  domain  lay  to  the  west  of  the 
Mississippi.  And  it  is  out  of  this  domain  that  the 
great  feudal  holdings  of  the  West  have  been  carved. 
From  the  largesses  of  the  government  in  the  form 
of  subsidies  to  the  railroads  and  for  other  internal 
improvements,  337,740,000  acres  were  taken.  This 
is  an  empire  equal  to  one-sLxth  of  the  total  area  of 
the  United  States.  It  is  an  area  three  times  the 
size  of  France,  with  a  population  of  43,000,000  souls. 
A  great  part  of  this  domain  was  given  to  the  Pacific 
railroads.  All  told,  between  129,000,000  and  150,- 
000,000  acres  were  donated  to  the  Northern  Pacific, 
Atlantic  Pacific,  Union  Pacific,  Central  Pacific, 
Kansas  Pacific,  and  Southern  Pacific  railroads. 
This  does  not  include  8,000,000  acres  granted  to 
the  railways  m  the  State  of  Texas.  These  land 
grants  alone  would  have  more  than  paid  the  cost 

1  See  Chapter  XX,  "The  Tenant  Farmer." 


204  THE  HIGH  COST  OF  LIVING 

of  these  railroads  had  the  government  undertaken 
their  construction. 

The  grant  to  the  Northern  Pacific  Railway  is 
estimated  to  have  been  worth  $1,000,000,000. 
Had  the  land  been  sold  directly  to  settlers  at  the 
prices  later  received  by  the  railroad,  five  trans- 
continental railroads  could  have  been  built  from 
the  sale  of  the  land  alone.  An  exhaustive  investi- 
gation of  the  grant  to  the  Northern  Pacific  was 
made  by  a  committee  of  Congress,  which  reported 
that  the  entire  cost  of  the  railroad  had  been  paid 
for  out  of  the  land  grants  and  that  a  surplus  of 
$41,281,000  remained  to  the  company.  The  com- 
mittee stated  in  its  report  to  Congress: 

"The  undersigned  supposed  that  all  that  could 
be  asked  of  the  government  in  the  exercise  of  the 
most  prodigal  generosity  would  be  a  sufficient 
amount  of  lands  to  enable  the  company  to  con- 
struct its  road  without  costing  it  a  single  dollar  of 
its  own  money,  and  that  either  of  the  foregoing 
hypotheses  shows  a  surplus  of  many  millions  more 
than  are  necessary  for  that  purpose.  It  has  oc- 
cmred  to  them  that  it  might  be  to  the  interest  of 
the  people  of  the  United  States  generally  to  look 
after  the  surplus,  whatever  it  may  be."^ 

Mr.  Wilson,  for  many  years  commissioner  of 
the  land  department  of  the  Illinois  Central  Rail- 
road, stated  that  if  properly  managed  the  Northern 
Pacific  land  would  build  the  entire  road  connecting 

'  Public  Domain,  Donaldson,  p.  889. 


LAND  FOR  THE  LANDLESS  205 

the  then  terminus  of  the  Grand  Trunk  through  to 
Puget  Sound,  fit  out  an  entire  fleet  of  sailing  vessels 
and  steamers  for  the  China  Sea,  India,  and  coast 
trade,  and  leave  a  surplus  that  would  roll  up  to 
millions.  He  deemed  the  probable  value  of  the 
land  grant  $990,000,000,  its  possible  value  $1,320,- 
000,000.1 

It  is  out  of  these  railroad  land  grants  that  many 
of  the  bonanza  farms  of  the  West  have  been  carved. 
They  are  to  be  found  from  Canada  to  Mexico  and 
from  the  Missouri  River  to  the  Pacific  Ocean.  The 
Texas  Land  Syndicate  No.  3  owns,  or  did  own, 
3,000,000  acres  in  Texas.  Another  British  land 
company  owned  300,000  acres  in  Kansas.  The 
Duke  of  Sutherland  owns  hundreds  of  thousands 
and  Sir  Edward  Reed  controls  1,000,000  acres  in 
Florida.  Another  English  syndicate  controls  2,000,- 
000  acres  in  Mississippi.  There  are  Dutch,  British, 
and  German  syndicates  whose  estates  exceed  a 
million  acres.  Fifty-four  individuals  and  syndicates 
own  26,710,000  acres,  an  area  greater  than  seven  of 
the  more  populous  Eastern  States  with  a  popula- 
tion of  8,359,000  people. 

Much  of  the  land  so  acquired  was  obtained  by 
fraud.  False  entries  were  made,  and  when  the 
land  was  patented  to  the  individual  claimant  it 
was  inmiediately  transferred  to  corporations  and 

'  The  United  States  in  Our  Own  Times,  E.  Benjaruiu  Andrews, 
p.  4. 


206  THE  HIGH  COST  OF  LIVING 

individuals,  dummy  claimants  being  used  for  this 
puipose.  The  amount  of  these  fraudulent  enclosures 
will  never  be  known.  Some  years  ago  there  ap- 
peared in  Everybody's  Magazine  an  investigation 
of  land  monopoly  upon  the  Pacific  coast. ^  It  re- 
cited the  story  of  how  a  poor  German  butcher  had 
landed  in  this  country  in  1850;  of  how  he  crossed  the 
continent  and  began  to  acquire  land.  In  a  genera- 
tion's time  he  and  his  partner  secured  possession  of 
14,539;000  acres  of  the  richest  land  in  California  and 
Oregon.  His  holdings  covered  22,500  square  miles, 
an  area  three  times  as  great  as  the  State  of  New 
Jersey  with  its  population  of  1,500,000  souls.  It  is 
said  that  a  man  may  travel  upon  a  single  estate  in 
California  from  the  northern  to  the  southern  bound- 
ary of  the  State  without  traversing  any  other  prop- 
erty. 

This  same  article  tells  how  100  men  in  the  Sacra- 
mento Valley,  California,  came  to  own  17,000,000 
acres;  of  ranches  of  twenty  and  even  a  hundred 
miles  in  extent;  of  individual  estates  twice  the 
size  of  Belgium  and  bigger  than  all  Switzerland, 
bigger  even  than  the  combined  area  of  New  Hamp- 
shire, Massachusetts,  Connecticut,  and  Delaware. 
Other  investigations  have  been  made  of  the  extent 
of  the  land  monopoly  and  of  the  methods  employed 
in  acquiring  these  great  estates.  An  exhaustive 
study,  made  by  Mr.  William  R.  Leighton,  of  Omaha, 

1  Everybody's  Magazine,  May,  1905. 


LAND  FOR  THE  LANDLESS  207 

Neb.,  was  published  in  the  Boston  Transcript.^ 
It  states  that  more  than  150,000,000  acres  have 
been  illegally  or  collusively  appropriated  from  the 
public  domains- 
Official  investigations  have  recently  been  made 
in  California  of  the  large  land  holdings  in  twenty- 
one  counties  in  that  State.  The  investigation  did 
not  include  5,000,000  acres  owned  by  the  Southern 
Pacific  Railroad  or  the  immensely  valuable  Spanish 
land  grants  in  San  Diego  and  Los  Angeles  Counties. 
In  San  Diego  County  there  is  the  Santa  Margarita 
grant  of  240,000  acres  and  the  Irvine  holding  of 
nearly  200,000  acres.  The  report  showed  that  four 
men  in  Kern  County  owned  nearly  1,500,000  acres. 
All  told,  292  men  owned  2,339,315  acres  and  433 
men  owned  5,968,556  acres.  This  investigation  only 
included  holdings  in  excess  of  2,000  acres;  whereas, 
if  estates  in  excess  of  1,000  acres  had  been  taken, 
the  exhibit  would  have  shown  a  far  larger  portion 
of  the  State  to  be  in  monopoly  holdings. 

The  United  States  census  gives  some  indication 
of  the  extent  of  these  great  estates  and  the  land 
monopoly  which  prevails.  From  the  census  re- 
turns of  1900  it  appears  that  of  the  841,000,000 
acres  of  land  under  cultivation  200,000,000  acres 
are  in  farms  whose  average  size  is  4,230  acres.  These 
farms  are  owned  by  47,276  persons.  One-fourth  of 
the  total  agricultural  acreage  of  the  United  States 

1  Issues  May  20  to  July,  1905. 


208  THE   HIGH  COST  OF  LIVING 

is  owned  by  .0006  per  cent,  of  the  population.  This 
area  is  considerably  greater  than  the  combined 
area  of  Germany  and  Great  Britain,  whose  combined 
population  is  110,000,000  souls.  Yet  here  in  free 
America  one-fourth  of  the  cultivated  land  is  owned 
by  a  handful  of  persons,  whose  number  is  less  than 
that  of  a  good-sized  suburb  of  an  Eastern  city. 

Speaking  of  this  situation,  the  Public  Lands  Com- 
mission appointed  by  President  Roosevelt  said: 

"It  is  apparent  that  in  very  many  localities  and 
perhaps  in  general  a  larger  proportion  of  the  public 
land  is  passing  into  the  hands  of  speculators  than 
into  those  of  actual  settlers  who  are  making  homes. 
.  .  .  Nearly  everywhere  the  large  landowner  has 
succeeded  in  monopolizing  the  best  tracts  whether 
of  timber  or  agricultural  land.  .  .  .  The  com- 
mission has  had  inquiries  made  as  to  how  a  number 
of  estates  selected  haphazard  have  been  acquired. 
Almost  without  exception  collusion  or  evasion  of 
the  law  and  spirit  of  the  law  was  involved."  ^ 

But  land  monopoly  is  not  confined  to  the  West. 
It  is  found  all  over  the  South  as  well.  Even  in  our 
Eastern  States  round  about  the  great  cities  men  of 
wealth  are  acquiring  great  estates  for  residential 
purposes.  Here  the  land  is  being  diverted  from  the 
production  of  wealth,  badly  needed  in  the  near-by 
cities,  into  pleasure  estates. 

The  reports  from  the  land-settlement  colonies  in 
Europe  show  that  a  man  can  support  himself  in 

'  Senate  Document  No.  154,  58th  Congress,  Third  Session,  p.  14. 


LAND  FOR  THE  LANDLESS  209 

comfort  on  a  farm  of  40  or  50  acres.  In  little  Den- 
mark the  majority  of  the  farmers,  who  as  a  class 
are  the  most  prosperous  in  the  world,  live  in  com- 
fort on  farms  of  less  than  20  acres.  If  the  200,000,- 
000  acres  held  by  a  handful  of  persons  were  divided 
into  50-acre  tracts  they  would  provide  farms  for 
4,000,000  farmers  or  20,000,000  people. 

That  which  is  true  of  agricultural  and  grazing 
land  is  true  of  timber-land  as  well.  An  investiga- 
tion by  the  Bureau  of  Corporations  of  the  Depart- 
ment of  Commerce  in  1914  reports  that  "1,694 
timber-owners  hold  in  fee  over  one-twentieth  of 
the  land  area  of  the  entire  United  States  from  the 
Canadian  to  the  Mexican  border.  These  1,694 
holders  own  105,600,000  acres.  This  is  an  area 
four-fifths  the  size  of  France,  or  greater  than  the 
entire  State  of  California,  or  more  than  two  and 
one-half  times  the  land  area  of  the  six  New  Eng- 
land States.  Sixteen  holders  own  47,800,000  acres, 
or  nearly  ten  times  the  land  area  of  New  Jersey. 
Three  land-grant  railroads  own  enough  to  give  15 
acres  to  every  male  of  voting  age  in  the  nine  Western 
States  where  almost  all  their  holdings  lie.  In  the 
upper  peninsula  of  Michigan  45  per  cent,  of  the 
land  is  held,  mostly  in  fee,  by  32  timber-owners. 
In  Florida  52  holders  (mostly  timber-owners)  hold 
one-third  of  the  land  in  the  entire  State."* 

^Report  Bureau  of  Corporations  on  "The  Lumber  Industry," 
parts  II  and  III,  p.  xviii. 


210  THE  HIGH  COST  OF  LIVING 

The  report  shows  that  these  holdings  are  inter- 
locked in  such  a  way  that  they  form  substantially 
a  single  holding.  It  states  further:  "The  Southern 
Pacific  has  4,318,000  acres  in  northern  California 
and  western  Oregon  and,  with  the  Union  Pacific, 
which  controls  it,  millions  of  acres  elsewhere.  The 
Northern  Pacific  owns  3,017,000  acres  of  timber- 
land  and  millions  more  of  non-timbered  land.  The 
Weyerhauser  Timber  Company  owns  1,945,000 
acres.  In  Florida,  three  holders  have  4,200,000 
acres  and  the  182  largest  timber-holders  have  over 
16,990,000  acres,  nearly  one-half  the  land  area  of 
the  State.  In  the  whole  investigation  area  the 
1,802  largest  holdings  of  timber  involve  79,092,000 
acres  of  timber-land,  and  in  addition  some  of  these 
holders  own  10,652,000  acres  lying  in  timbered 
parts  but  not  now  bearing  merchantable  timber. 
Finally,  to  timber  concentration  and  to  land  con- 
centration is  added,  in  our  most  important  timber 
section,  a  closely  connected  railroad  domination. 
The  formidable  possibilities  of  this  combination 
in  the  Pacific  Northwest  and  elsewhere  are  of  the 
gravest  pubHc  importance.  In  the  last  forty  years 
concentration  has  so  proceeded  that  195  holders, 
many  interrelated,  now  have  practically  one-half 
of  the  privately  owned  timber  in  the  investigation 
area  (which  contains  80  per  cent,  of  the  whole). 
This  formidable  process  of  concentration  in  timber 
and  in  land  certainly  involves  grave  future  pos- 


LAND  FOR  THE  LANDLESS  211 

sibilities  of  impregnable  monopolistic  conditions 
whose  far-reaching  consequences  to  society  it  is 
now  difficult  to  anticipate  fully  or  to  overesti- 
mate." ^ 

So  closely  interrelated  are  these  colossal  holdings 
that  of  aljout  SO  per  cent,  of  the  privately  owned 
timber  of  the  country  three  holders  have  14  per 
cent.,  90  persons  have  two-fifths,  and  195  have  nearly 
one-half.  In  other  words,  at  least  one-half  of  the 
standing  timber  in  the  United  States  is  owned  by 
less  than  200  holders;  and  these  200  again  are 
either  interlocked  corporations  or  individuals  act- 
ing in  all  essentials  as  a  unit.  They  fix  and  con- 
trol the  output  and  the  prices  of  timber  and  lumber 
and  in  so  doing  the  price  of  furniture,  building  ma- 
terials, and  all  the  thousands  of  industries  that  are 
dependent  upon  timber  and  timber  products. 

Here  is  another  economic  phenomenon  for  the 
most  part  overlooked  by  the  government,  by  econ- 
omists, and  by  agencies  which  are  urging  considera- 
tion of  the  food  problem.  Here  are  hundreds  of 
millions  of  acres  of  land  arbitrarily  held  out  of  use 
by  their  owners,  lands,  too,  obtained  in  large  part 
by  fraud  and  collusion,  which  are  now  being  used 
not  for  the  production  of  wealth  but  to  exclude 
hungry  humanity  from  the  land.  That  these  lands 
would  be  tilled  if  men  had  an  opportunity  to  till  them 
is  indicated  by  the  eager  rush  of  settlers  whenever 

1  Idem,  "The  Lumber  Industry,"  part  I,  pp.  xxii  and  xxiii. 


212  THE  HIGH  COST  OF  LIVING 

an  Indian  reservation  is  opened  up  to  use;  it  is 
indicated  by  the  fact  that  hundreds  of  thousands 
of  men  are  working  on  these  estates  as  agricultural 
workers  or  as  tenants.  There  is  no  shortage  of 
land  in  America  and  no  unwillingness  on  the  part 
of  men  to  go  to  the  land.  We  ourselves  have  cre- 
ated the  conditions  which  confront  us,  conditions 
which  we  must  now  take  steps  to  correct. 


CHAPTER  XIX 

EXPLOITING  THE  WOULD-BE  FARMER 

Growing  out  of  the  conditions  described  in  the 
preceding  chapters  is  a  more  or  less  organized  sys- 
tem of  exploitation  or  fraud  in  the  sale  of  land.  It 
is  going  on  all  over  the  country,  especially  in  the 
West  and  Southwest.  Persons  of  foreign  birth  who 
have  accumulated  some  savings  are  probably  the 
worst  sufferers,  partly  from  their  ignorance  and 
partly  from  their  desire  to  acquire  a  piece  of  land 
they  can  call  their  own.  The  reclamation  projects 
constructed  by  the  Federal  Government  at  great 
expense  in  the  West,  estates  which  are  being  broken 
up  and  placed  upon  the  market  are  advertised  over 
the  country.  The  wonderful  fertility  of  the  land 
is  portrayed  in  glowing  colors,  while  easy  terms  of 
payment  are  held  out  as  an  inducement  to  the 
weary  worker  to  lure  him  to  what  in  many  cases 
involves  a  loss  of  his  investment.  But  the  practice 
is  not  confined  to  the  West  and  South.  The  selling 
of  land  at  speculative  prices  on  onerous  terms  and 
under  conditions  which  involves  almost  inevitable 
failure  is  a  common  practice  all  over  the  country.^ 

^  As  Commissioner  of  Immigration  many  requests  have  come  to 
me  to  direct  immigrants  to  land  colonies.  I  have  had  conferences 
with  representatives  of  many  of  the  projects,  for  it  has  been  my 
belief  that  the  immigration  problem  was  a  land  problem;    that  if 

213 


214  THE  HIGH  COST  OF  LIVING 

The  man  who  wants  to  buy  a  farm  has  no  means 
of  rehable  information.  He  knows  nothing  of  the 
condition  of  the  soil,  of  the  faciHties  for  marketing, 
of  the  kinds  of  crops  to  be  planted.  He  is  com- 
pelled to  canvass  a  wide  territory.  If  he  buys  at 
a  distance  he  must  depend  on  the  statements  of  a 
land  agent.  There  is  no  such  thing  as  a  nation- 
wide clearing-house  or  bureau  of  information  to 
which  the  would-be  farmer  can  go  for  information 
on  which  he  can  rely. 

Thousands  of  persons  are  being  exploited  or  at 
least  led  into  ventures  in  which  they  lose  all  of  their 
accumulated  savings  every  year.  They  are  the  vic- 
tims of  more  or  less  unscrupulous  promoters  and  cor- 
porations organized  for  the  purpose. 

A  thorough  investigation  of  the  experiences  by 
would-be  farmers  has  been  made  by  the  Land-Colony 
Commission  of  California.  It  sent  out  investigators 
to  secure  statements  of  men  who  had  purchased 
small  holdings  and  who,  in  large  numbers,  had  been 
defrauded  by  individuals  and  corporations  operating 
as  alleged  development  companies.    The  experiences 

some  means  could  be  found  to  get  the  immigrant  to  the  land  on  easy- 
terms  he  would  quickly  absorb  our  institutions  and  become  a  per- 
manent asset  to  the  country.  But  all  of  the  projects  presented 
were  open  to  suspicion  and  many  of  them  were  thoroughly  dishonest. 
There  was  Uttle  chance  of  the  immigrant  making  good,  and  in  most 
cases  the  land  was  to  be  sold  at  a  highly  inflated  price.  Usually 
there  were  no  advantages  in  the  neighborhood,  there  was  no  means 
of  marketing,  no  schools,  and  a  five-to-one  chance  that  even  if  the 
land  did  produce  a  living  it  could  not  be  disposed  of.  Hundreds  of 
such  projects  are  to  be  found  throughout  the  Western  States.  They 
are  speculative  enterprises  pure  and  simple. 


EXPLOITING  THE  WOULD-BE  FARMER    215 

of  these  land-hungry  people,  most  of  whom  had  spent 
a  great  part  of  their  Ufe  in  the  slow  and  laborious 
accumulation  of  a  little  money  with  which  to  buy 
a  home  in  the  country,  are  pathetic  in  the  ex- 
treme. 

One  of  the  reports  was  from  a  colony  of  Russians. 
They  had  accumulated  $150,000  for  the  purchase 
of  a  large  tract  of  land.  This  represented  the  sav- 
ings of  years.  A  land  company  in  California  in- 
duced them  to  invest  their  capital  in  a  tract  of  land 
which  was  represented  to  be  very  fertile.  The  first 
year  the  colonists  obtained  but  a  scanty  crop.  But 
they  persevered.  The  second  year  the  crop  was 
no  better.  Finally  they  sent  to  the  State  university 
for  an  expert  who,  after  investigating  the  land,  re- 
ported that  it  was  practically  worthless.  It  was 
unsuited  to  agriculture. 

Reports  of  hundreds  of  other  cases  have  been 
gathered  by  the  commission.  Here  is  the  story  of 
an  Itahan.  His  age  was  forty.  He  had  worked  as 
a  farm-hand  in  Nevada.  He  saved  enough  money 
to  buy  30  acres  of  land,  for  which  he  paid  from  $100 
to  $110  an  acre.  The  first  year  the  total  value  of 
his  crop  was  $150.  The  second  year  it  was  $200. 
The  third  year  it  was  $165.  He  was  unable  to 
make  a  living.  The  land  was  worthless.  It  had 
been  unloaded  on  him  by  one  of  the  many  dis- 
honest land-speculation  companies  which  flourish 
in  the  State.     Describing  his  experience  in  a  report 


216  THE  HIGH  COST  OF  LIVING 

to  the  commission,  he  said:  "The  soil  is  poor  hard- 
pan.  I  sunk  in  the  place  more  than  $5,000.  I 
could  hardly  make  a  Hving.  The  land  does  not 
produce  enough.  If  I  had  kept  the  money  in  the 
bank  at  4  per  cent,  interest  I  would  have  more 
now,  not  figuring  my  labor." 

A  second  settler  was  a  miner.  He  had  a  wife  and 
three  children.  He  bought  10  acres  of  land  at  $100 
an  acre.  In  addition  he  spent  $750  on  improve- 
ments. The  first  year  the  total  value  of  his  crop 
was  $90,  the  second  year  $130,  and  the  third  year 
$57.  In  addition  he  had  a  cow,  two  hogs,  and  some 
poultry  from  which  he  derived  a  few  dollars  more. 
He  says  that  the  land  he  bought  is  worthless  for 
small  farming. 

Another  settler  worked  in  a  logging-camp.  He 
bought  20  acres  of  land  at  $100  an  acre.  This  he 
had  to  improve  at  an  expense  of  $435.  He  put  his 
savings  into  farm  implements,  a  cow,  and  some  other 
live  stock.  The  first  year  he  realized  $150  from  the 
farm  and  $15  from  his  poultry.  "The  land  pro- 
duces nothing,"  he  says.  "Will  work  outside  and 
pay  up  in  one  or  two  years.  I  have  paid  $1,500  for 
the  land,  which  does  not  produce  enough  to  pay 
expenses.  I  now  have  no  money  to  put  in  a  crop. 
I  was  told  that  the  land  would  produce  a  volunteer 
crop  the  first  year,  enough  for  a  Hving  and  to  meet 
the  payments.  But  the  crop  hardly  paid  the  cost 
of  harvesting.    Ten  acres  out  of  the  20  are  worth- 


EXPLOITING  THE  WOULD-BE  FARMER    217 

less  except  for  pasture.  The  second  year  I  had  no 
money  to  put  in  a  crop  at  all." 

This  sort  of  exploitation  is  organized  as  a  business. 
Agents  of  steamship-lines,  alleged  immigrant  banks 
which  have  the  confidence  of  the  foreign  popula- 
tion, circularize  and  urge  the  ignorant  foreigners  to 
buy  land  frequently  far  from  their  place  of  resi- 
dence. The  desire  to  escape  from  tenancy,  the  am- 
bition to  leave  something  to  their  children,  the  hope 
of  becoming  a  home-owner  leads  men  to  listen  too 
credulously  to  the  dishonest  advertisements  and 
statements  of  land  agents  and  land  corporations 
which  have  acquired  great  stretches  of  land  at  a 
low  price  which  they  seek  to  unload  upon  unsus- 
pecting buyers. 

There  are  no  laws  for  the  protection  of  the  would- 
be  farmer  from  this  sort  of  exploitation.  And  there 
are  no  agencies  to  which  he  can  go  and  be  guided 
in  his  purchase.  He  buys  land  at  a  high  price. 
He  is  induced  to  pay  down  as  large  a  sum  as  can  be 
squeezed  from  him.  He  then  has  insufficient  capi- 
tal to  equip  the  farm.  He  is  without  credit  or  is 
forced  to  pay  usurious  interest.  His  annual  pay- 
ments or  interest  charges  use  up  his  surplus  in- 
come. A  bad  season  or  inability  to  market  his 
crops  leaves  him  a  prey  to  money-lenders.  In  a 
year  or  two  he  becomes  discouraged  and  throws 
up  his  hands  when,  if  he  had  been  aided  in  his 
efforts,  he  would  have  possibly  made  a  good  farmer. 


218  THE  HIGH  COST  OF  LIVING 

The  experience  of  one  man  is  immediately  known 
to  others.  The  misfortune  of  one  ahen  is  known 
to  the  whole  colony.  The  exploitation  of  a  single 
immigrant  deters  hundreds  from  venturing  into 
the  country  no  matter  what  their  hunger  for  land 
may  be. 

This  is  a  subject  that  should  receive  immediate 
congressional  action.  There  is  evidence  that  hun- 
dreds of  thousands,  possibly  millions,  of  foreigners 
are  planning  to  return  to  Europe  when  the  war 
is  over.  They  are  going  back  to  Italy,  Hungary, 
Poland,  Bohemia,  and  Russia.  They  will  leave  the 
mines,  the  munitions  factories,  and  the  cities  and 
take  with  them  the  savings  accumulated  during  this 
period  of  prosperity.  Many  will  undoubtedly  re- 
turn— although  the  great  majority  of  them  plan 
to  remain.  And  many  of  them  are  leaving  America 
because  they  desire  to  acquire  a  farm  and  beheve 
that  land  will  be  cheap  in  Europe  after  the  war. 
Many  of  these  aliens,  possibly  the  majority,  were 
farmers  in  their  old  homes.  Many  of  them  would 
acquire  farms  in  this  country  if  land  could  be  se- 
cured at  a  reasonable  price  and  colonies  could  be 
organized  in  which  persons  of  the  same  nationality 
could  live  together.  For  that  is  the  kind  of  farm 
life  they  have  been  accustomed  to  at  home.  But 
only  the  government  can  promote  such  a  project. 
Only  the  government  can  organize  colonies,  insure 
protection,    cheap   credit,   and   provide   marketing 


EXPLOITING  THE  WOULD-BE  FARMER    219 

facilities,  all  of  which  are  essential  to  the  new 
agricultural  programme.  This  subject  wiU  be  dis- 
cussed in  a  later  chapter.^ 

^See  Chapter  XXIII,  "A  New  Agricultural  Programme." 


CHAPTER  XX 

THE  TENANT  FARMER 

If  one  would  know  the  reasons  for  the  decadence 
of  farming  in  the  United  States  he  should  read 
the  testimony  of  tenant  farmers  and  farm-laborers 
gathered  by  the  Industrial  Relations  Commission.^ 
And  the  conditions  disclosed  in  the  Western  States 
where  the  inquiry  was  made  are  the  same  as  would 
have  been  discovered  had  the  inquiry  been  made  in 
the  Southern  or  Eastern  States.  For  farm  tenancy 
is  fast  becoming  a  rule  in  the  United  States  despite 
the  almost  limitless  resources  of  the  country.  So 
long  as  the  public  domain  was  open  to  settlement 
men  would  not  work  as  tenants  or  as  agricultural 
laborers.  They  took  up  a  homestead  of  their  own. 
And  this  is  always  the  instinct  of  men.  They  pre- 
fer to  work  for  themselves  rather  than  for  another. 
It  was  this  motive  that  lured  immigration  to  the 
United  States  from  the  very  beginning.  It  was  this 
that  filled  up  the  continent  by  settlers  who  gen- 
eration after  generation  moved  westward  to  the 
Pacific  Ocean.  But  when  all  the  land  had  been  taken 
up,  when  it  began  to  acquire  a  speculative  value, 
then  tenancy  appeared.  And  year  by  year  the 
number  of  tenants  has  increased  until  in  some  sec- 

1  Report  of  Commission  on  Industrial  Relations,  vols.  1  and  10. 

220 


THE  TENANT  FARMER  221 

tions  home-owning  farmers  are  almost  the  excep- 
tion. As  early  as  1880,  25.6  per  cent,  of  all  farms 
in  the  country  were  operated  by  others  than  own- 
ers. In  1890  the  percentage  had  increased  to  28.4 
per  cent.  By  that  time  most  of  the  land  had  been 
taken  up.  And  during  the  next  ten  years  farm 
tenancy  jumped  to  35.3  per  cent.  By  1910  it  had 
reached  37  per  cent.  In  that  year  out  of  a  total  of 
6,361,000  farms  2,354,676  were  operated  by  tenants. 
Tenancy  increased  16.3  per  cent,  during  the  pre- 
vious ten  years  and  farm  ownership  only  8.1  per 
cent. 

It  is  impossible  to  have  a  healthy  agriculture 
under  the  tenant  system.  Tenancy  is  destructive 
of  good  farming.  It  discourages  initiative.  It 
leads  to  shiftlessness.  There  is  no  incentive  to 
the  tenant  to  be  a  good  farmer.  At  the  end  of 
the  term,  usually  one  year,  all  of  the  improvements 
made  by  the  tenant  pass  to  the  owner.  The  tenant 
may  take  away  the  crops  but  nothing  more.  As  a 
consequence,  the  tenant  does  nothing  to  improve 
or  enrich  the  land.  He  refuses  to  make  repairs. 
He  selects  such  crops  as  will  give  an  immediate 
return  with  the  least  possible  labor.  He  permits 
the  buildings  and  improvements  to  go  to  decay. 
He  exhausts  the  land  by  failing  to  fertilize  it.  In 
time  he  abandons  the  property  because  it  is  no 
longer  profitable. 

Tenancy  leads  to  indifferent  cultivation.     There 


222  THE  HIGH  COST  OF  LIVING 

is  no  stimulus  to  efficiency.  The  tenant  is  careless. 
He  has  to  pay  what  the  landlord  demands  or 
what  some  other  applicant  will  pay  for  the  hold- 
ing. If  the  tenant  increases  the  fertility  of  the 
land  it  is  made  an  excuse  for  an  increase  in  rent. 
If  he  is  thrifty  and  industrious,  if  he  makes  the 
farm  more  productive,  if  he  drains  and  irrigates, 
the  advantage  all  accrues  to  the  owner  or  to  some 
other  tenant  who  will  pay  an  increased  rent  for 
the  property  because  of  his  exertions. 

In  this  country  the  tenant  has  no  security  what- 
ever. He  may  be  evicted  at  the  end  of  the  year. 
Competitive  tenancy  such  as  everywhere  exists  in 
America  is  destructive  of  farming.  It  leads  to  rapid 
deterioration  of  the  farm. 

The  Commission  on  Industrial  Relations  found 
that  tenancy  in  the  Southwestern  States  is  already 
the  prevailing  method  of  cultivation  and  that  it 
is  increasing  at  a  very  rapid  rate.  In  Texas  the 
number  of  tenant  farmers  in  1910  was  219,571. 
They  operated  53  per  cent,  of  the  farms  in  the  State. 
In  Oklahoma  and  other  Southern  States  the  condi- 
tions are  much  the  same. 

Speaking  of  the  effect  of  tenancy  on  the  tenant 
and  the  low  standard  of  life  which  prevails  among 
the  tenant  farmers,  the  commission  states:* 

"Under  this  (the  tenant)  system  tenants  as  a 
class  earn  only  a  bare  living  through  the  work  of 

*  Report  of  Commission  on  Industrial  Relations,  vol.  1. 


THE  TENANT  FARMER  223 

themselves  and  their  entire  families.  Few  of  the 
tenants  ever  succeed  in  laying  by  a  surplus.  On 
the  contrary,  their  experiences  are  so  discouraging 
that  they  move  from  one  farm  to  the  next  in  the 
constant  hope  of  being  able  to  better  their  condition. 
Without  the  labor  of  the  entire  family  the  tenant 
farmer  is  helpless.  As  a  result,  not  only  is  his  wife 
prematurely  broken  down  but  the  children  remain 
uneducated  and  without  the  hope  of  any  condition 
better  than  that  of  their  parents.  The  tenants 
having  no  interest  in  the  results  beyond  the  crops 
of  a  single  year,  the  soil  is  being  rapidly  exhausted 
and  the  conditions,  therefore,  tend  to  become 
steadily  worse.  Even  at  present  a  very  large  pro- 
portion of  the  tenants'  families  are  insufficiently 
clothed,  badly  housed,  and  underfed.  Practically 
all  of  the  white  tenants  are  native-born.  As  a 
result  of  these  conditions,  however,  they  are  de- 
teriorating rapidly,  each  generation  being  less  ef- 
ficient and  more  hopeless  than  the  one  preceding. 

"A  very  large  proportion  of  the  tenants  are  hope- 
lessly in  debt  and  are  charged  exorbitant  rates  of 
interest.  Over  95  per  cent,  of  the  tenants  borrow 
from  some  source  and  about  75  per  cent,  borrow 
regularly  year  after  year.  The  average  interest 
rate  on  all  farm  loans  is  10  per  cent.,  while  small 
tenants  in  Texas  pay  15  per  cent,  or  more.  In 
Oklahoma  the  conditions  are  even  worse  in  spite 
of  the  enactment  of  laws  against  usury.  ^  Further- 
more, over  80  per  cent,  of  the  tenants  are  regularly 
in  debt  to  the  stores  from  which  they  secure  their 
supplies  and  pay  exorbitantly  for  this  credit.  The 
average  rate  of  interest  on  store  credit  is  con- 
servatively put  at  20  per  cent.,  and  in  many  cases 
ranges  as  high  as  60  per  cent. 

1  See  Chapter  XXII,  "The  Farmer  and  the  Banker." 


224  THE  HIGH  COST  OF  LIVING 

"The  leases  are  largely  in  the  form  of  oral  con- 
tracts which  run  for  only  one  year  and  which 
make  no  provision  for  compensation  to  the  tenant 
for  any  improvements  which  may  be  made  upon 
the  property.  As  a  result,  tenants  are  restrained 
from  making  improvements,  and  in  many  cases 
do  not  properly  provide  for  the  up-keep  of  the  prop- 
erty. 

"Furthermore,  the  tenants  are  in  some  instances 
the  victims  of  oppression  on  the  part  of  landlords. 
This  oppression  takes  the  form  of  dictation  of 
character  and  amount  of  crops,  eviction  without 
due  notice,  and  discrimination  because  of  personal 
and  political  convictions.  The  existing  law  pro- 
vides no  recourse  against  such  abuses. 

"As  a  result  both  of  the  evils  inherent  in  the  ten- 
ant system  and  of  the  occasional  oppression  by  land- 
lords, a  state  of  acute  unrest  is  developing  among 
the  tenants,  and  there  are  clear  indications  of  the 
beginning  of  organized  resistance  which  may  result 
in  civil  disturbances  of  a  serious  character. 

"The  situation  is  being  accentuated  by  the  in- 
creasing tendency  of  the  landlords  to  move  to  the 
towns  and  cities,  reheving  themselves  not  only 
from  all  productive  labor  but  from  direct  respon- 
sibility for  the  conditions  which  develop.  Further- 
more, as  a  result  of  the  increasing  expenses  incident 
to  urban  life  there  is  a  marked  tendency  to  demand 
from  the  tenant  a  greater  share  of  the  products  of 
his  labor. 

"The  responsibiUty  for  the  existing  conditions 
rests  not  upon  the  landlords  but  upon  the  system 
itself.  The  principal  causes  are  to  be  found  in  the 
system  of  short  leases,  the  system  of  private  credit 
at  exorbitant  rates,  the  lack  of  a  proper  system  of 
marketing,   the   absence   of   educational   facilities, 


THE  TENANT  FARMER  225 

and  last  but  not  least  the  prevalence  of  land  specu- 
lation. 

"A  new  factor  is  being  introduced  into  the  agri- 
cultural situation  through  the  development  of  huge 
estates  owned  by  corporations  and  operated  by 
salaried  managers  upon  a  purely  industrial  system. 
The  labor  conditions  on  such  estates  are  subject 
to  grave  criticism.  The  wages  are  extremely  low, 
80  cents  per  day  being  the  prevailing  rate  on  one 
large  estate  which  was  thoroughly  investigated; 
arbitrary  deductions  from  wages  are  made  for 
various  purposes;  and  a  considerable  part  of  the 
wages  themselves  are  paid  in  the  form  of  coupons, 
which  are  in  all  essential  particulars  the  same  as 
the  "scrip"  which  has  been  the  source  of  such 
great  abuse.  Furthermore,  the  communities  exist- 
ing on  these  large  estates  are  subject  to  the  complete 
control  of  the  landowning  corporation,  which  may 
regulate  the  Hves  of  citizens  to  almost  any  extent. 
There  is  an  apparent  tendency  toward  the  increase 
of  these  large  estates,  and  the  greatest  abuses  may 
be  expected  if  they  are  allowed  to  develop  un- 
checked." 

Tenancy  is  another  explanation  of  the  condition 
of  agriculture  in  the  United  States.  And  students 
of  the  subject,  from  John  Stuart  MOl  down  to  date, 
have  condemned  tenancy  as  a  curse  to  a  state.  It 
is  a  curse  not  only  to  the  tenant  but  to  the  nation 
as  well.  It  is  destructive  of  self-respect  and  inde- 
pendence. It  leads  to  ignorance,  to  improvidence, 
to  the  decay  of  agriculture.  Every  nation  in  Eu- 
rope that  has  tolerated  tenancy  has  had  to  pay  the 
price  of  it,  whether  it  be  in  Ireland,  England,  and 


226  THE  HIGH  COST  OF  LIVING 

Scotland  or  in  Prussia,  Russia,  Austria-Hungary, 
or  Belgium.  The  political  and  social  condition  of 
the  people,  the  reaction  and  the  class  mle,  the 
ignorance  and  the  poverty,  the  decadence  of  the 
peasantry  are  inevitable  consequences  of  attempt- 
ing to  build  a  state  on  a  system  of  farm  tenancy, 
which  is  but  the  modern  equivalent  for  the  old 
feudal  relationship  of  master  and  serf.  Many  of 
the  countries  of  Europe  have  realized  the  results 
of  the  system,  notably  Denmark,  France,  and 
Great  Britain  in  Ireland.  Systems  of  state  aid 
to  tenants  who  would  be  owners  have  been  worked 
out  while  security  for  improvements  and  fixity  of 
tenure  have  been  insured  by  law.  America  almost 
alone  among  the  nations  has  left  the  tenant  to 
shift  for  himself  unprotected  by  the  state  in  any 
way. 


CHAPTER  XXI 
OPENING  UP  THE  LAND  TO   AGRICULTURE 

Agriculture  waits  on  a  constructive  policy. 
Not  of  education  but  of  economic  change.  And 
the  lion  in  the  pathway  of  the  production  of  food 
and  the  distribution  of  people  from  the  city  is  land 
monopoly,  the  holding  of  land  out  of  use  and  the 
indifferent  utilization  of  much  of  the  land  that  is 
under  cultivation.  This  is  the  great  obstacle  to 
farming. 

How  can  this  obstacle  be  overcome?  How  can 
idle  landholding  be  ended?  How  can  we  limit 
the  amount  of  land  a  man  may  own  to  that  which 
he  actually  needs  and  cultivates?  How  can  we 
break  up  the  200,000,000  acres  held  in  great  estates 
and  throw  open  to  use  the  400,000,000  acres  en- 
closed in  farms  but  not  cultivated  by  the  owners? 
How  can  the  would-be  farmer  be  placed  on  the 
land  and  a  system  of  ownership  be  substituted  for 
tenancy?  There  is  land  enough  for  millions  of 
workers  and  homes  for  tens  of  millions  of  people  in 
this  rich  country  of  ours  if  means  were  devised  for 
bringing  the  landless  man  and  the  manless  land  to- 
gether. 

These  are  problems  of  practical  statesmanship. 
They  are  no  more  difficult  than  the  problems  al- 

227 


228  THE  HIGH  COST  OF  LIVING 

ready  worked  out  by  the  Federal  Reserve  Banking 
act,  the  farm  loan  board,  and  the  many  constructive 
measures  of  Congress  for  the  promotion  of  industry 
and  shipping. 

The  solution  should  make  it  as  easy  as  possible 
for  any  one  to  go  to  the  land  who  desires  to  do  so. 
We  should  recognize  that  it  is  natural  that  some 
men  who  find  the  farm  uncongenial  will  want  to 
go  to  the  city  and  that  men  in  the  city  will  want 
to  live  in  the  country.  And  it  should  be  easy  for 
such  a  shift  to  be  made.  It  should  be  easy  to  be- 
come a  farmer,  almost  as  easy  as  to  become  an 
artisan.  That  should  be  the  aim  of  legislation. 
There  should  be  the  greatest  possible  freedom  of 
movement,  of  choice.  It  ought  to  be  possible  for 
one  generation  to  live  in  the  country  and  the  next 
generation  to  try  the  city.  It  ought  to  be  possible 
for  the  misfit  worker  to  become  a  farmer  and  the 
misfit  farmer  to  become  an  artisan.  We  cannot 
organize  the  American  people  into  industrial  castes 
as  is  the  case  in  Europe.  And  we  ought  not  to 
try  to  do  so.  Rather  there  should  be  opportunity 
for  change.  Men  should  have  as  wide  a  choice  as 
possible.  Not  the  choice  of  becoming  a  tenant  or 
a  farm-laborer  but  a  farm-owner. 

Of  all  the  measures  proposed  for  the  solution  of 
these  problems  the  taxation  of  land  values  is  the 
simplest  and  most  effective.  It  will  do  more  than  all 
other  measures  combined  to  create  that  fluidity  of 


OPENING   UP  THE  LAND  229 

movement  from  the  city  to  the  country  and  from  the 
country  to  the  city  that  should  be  the  principle 
of  industrial  eflSciency  and  of  industrial  democracy 
as  well.  The  immediate  effect  of  increasing  the 
taxes  on  land  would  be  to  check  speculation.  And 
speculation  is  the  real  reason  why  men  want  more 
land  than  they  can  use.  They  are  holding  it  against 
the  needs  of  society.  This  is  not  only  true  of  farm- 
ing land,  it  is  true  of  city  land  as  well.  This  is  why 
one-half  of  the  land  enclosed  in  farms  is  not  under 
cultivation;  this  is  why  the  West  and  South,  aside 
from  the  plantations  and  ranges  that  are  econom- 
ically dedicated  to  large-scale  production,  are  di- 
vided into  great  manorial  holdings  like  those  of 
feudal  Europe. 

This  reform,  known  generally  as  the  single  tax, 
is  comparatively  easy  to  inaugurate.  It  can  be 
put  into  effect  by  the  legislature  of  any  State  or 
by  a  county  where  home  rule  in  taxation  exists, 
by  an  act  which  exempts  from  local  taxation  all 
houses,  barns,  improvements,  growing  crops,  ma- 
chinery, and  personal  property  of  every  nature  and 
description.  By  merely  exempting  these  kinds  of 
property  from  taxation  all  taxes  will  automatically 
fall  upon  the  land.  No  other  taxes  will  be  levied. 
As  a  result  the  taxes  on  land  will  be  automatically 
increased.  And  if  the  tax  is  heavy  enough  it  will 
discourage  the  holding  of  land  for  any  other  pur- 
pose than  production.     Such  a  change  would  not 


230  THE  HIGH  COST  OF  LIVING 

materially  burden  the  speculator,  it  is  true,  if  the 
tax  rate  were  inconsiderable.  But  if  the  tax  upon 
the  land  was  increased  to  2  per  cent,  on  the  actual 
value  it  would  become  such  a  burden  that  the  owner 
would  seek  some  means  of  escape  from  it.  A  tax 
rate  of  2  per  cent,  on  land  valued  at  $100  an  acre 
would  amount  to  $2  per  acre.  On  a  10,000-acre 
farm  the  taxes  would  amount  to  $20,000.  On  a 
100,000-acre  farm  they  would  amount  to  $200,000 
a  year.  Quite  obviously  men  would  be  driven 
either  to  sell  their  land  or  put  it  to  productive  use 
under  such  a  tax.  They  would  either  cultivate  it 
themselves  or  dispose  of  it  to  would-be  farmers. 
They  would  cut  their  estates  up  into  small  holdings; 
they  would  accept  easy  terms  of  payment;  they 
would  offer  generous  terms  to  tenants;  they  would 
pay  higher  wages  to  farm-laborers. 

About  our  cities,  even  in  the  Eastern  States,  mil- 
lions of  acres  of  land  are  being  held  idly,  indifferently, 
and  by  inertia  just  because  it  costs  little  to  so  hold 
them.  The  owner  hopes  that  some  day  he  \^1  be 
able  to  realize  a  profit.  And  a  slight  increase  in  the 
taxes  on  land  would  bring  much  land  onto  the  market 
while  a  very  small  tax  upon  the  great  ranges  of  the 
West,  on  the  plantations  of  the  South,  on  the  mil- 
lion-acre estates  of  Texas,  California,  Oregon,  and 
Washington  would  lead  to  their  being  broken  up 
for  settlers. 

And  if  the  lax  upon  the  land  were  made  suffi- 


OPENING   UP  THE  LAND  231 

ciently  heav}^  men  would  take  only  such  land  as 
they  actually  needed  or  as  they  actually  worked, 
whether  it  was  ten  acres  or  a  hundred  acres.  They 
would  pay  an  annual  tax  to  the  State,  not  unlike 
the  rental  now  paid  the  landlord.  But  they  would 
then  be  free  from  all  other  taxes,  and  in  addition 
the  great  quantities  of  land  brought  onto  the  mar- 
ket would  materially  cheapen  the  rental  of  all  land. 
For  as  taxes  on  land  are  increased  the  price  of  the 
land  diminishes.  If  the  tax  amounted  to  5  or  6 
per  cent,  on  the  selling  value  land  would  have  very 
little  value.  For  such  a  tax  would  make  specula- 
tion impossible  and  the  holding  of  land  idle  so  costly 
to  the  owner  that  he  would  give  it  up. 

And  the  taxation  of  all  land  values  up  to  the  full 
amount  of  the  rental  value  is  the  aim  of  those  who 
beheve  in  the  single-tax  philosophy.  They  would 
tax  land  heavily  as  a  means  not  only  of  freeing  the 
land  but  of  freeing  man  as  well.  This  would  end 
tenancy;  it  would  end  all  land  speculation;  it  would 
end  land  monopoly  forever.  For  then  men  would 
hold  no  more  land  than  they  actually  used,  and  as 
land  would  exist  in  abundance  for  all  it  would  be 
impossible  for  owners  to  hold  men  either  as  tenants 
or  as  agricultural  workers.  Men  would  own  their 
own  farms  and  work  for  themselves.  And  that  is 
the  ideal  of  a  democratic  agriculture. 

Moreover,  the  untaxing  of  all  kinds  of  farm  im- 
provements would  encourage  men  to  build,  to  make 


232  THE  HIGH  COST  OF  LIVING 

their  places  more  attractive.  Just  as  many  cities 
seek  to  encourage  factories  in  their  midst  by  exempt- 
ing them  from  taxation,  so  the  exemption  of  all 
kinds  of  farm  improvements  will  lead  to  better 
farms.  This  is  one  way  to  improve  the  farm  and 
a  very  easy  way.  For  it  is  automatic  in  its  oper- 
ation. 

It  is  rather  remarkable  that  the  countries  that 
have  gone  furthest  in  the  untaxing  of  improve- 
ments and  the  taxation  of  land  values  are  agricul- 
tural states.  During  the  ten  years  just  before  the 
war  the  provinces  and  cities  of  western  Canada  had 
made  many  experiments  along  these  lines.  Such 
cities  as  Vancouver,  Edmonton,  Calgary,  Prince 
Rupert,  in  fact,  almost  all  of  the  cities  west  of 
Manitoba,  have  taken  taxes  off  houses  and  improve- 
ments while  the  country  districts  have  levied  taxes 
on  unimproved  and  wild  land  to  end  the  specula- 
tion which  prevailed.  Very  remarkable  changes 
followed  the  shifting  of  taxes  to  the  land.  Land 
became  cheaper  as  speculation  was  discouraged. 
Home-ownership  increased.  Men  built  homes. 
The  towns  expanded  over  a  wider  area.  Free  from 
the  fear  of  taxes,  men  made  improvements  on  their 
property. 

Influenced  partly  by  the  experience  of  Canada 
the  Farmers'  Non-Partisan  League  of  North  Dakota 
inserted  in  its  platform  in  1916  a  declaration  for  the 
exemption   of  farm  improvements  from   taxation. 


OPENING  UP  THE  LAND  233 

They,  too,  desired  to  end  the  alien  and  speculative 
ownership  of  land  which  was  retarding  the  growth 
of  the  State.  And  one  of  the  measures  passed  by 
the  farmers'  majority  at  the  session  of  1917  was  an 
act  materially  reducing  the  taxes  on  improvements 
and  with  it  a  permissive  measure  permitting  cities 
to  do  as  they  pleased  in  the  matter  of  exemptions. 
In  1916  the  people  of  California  voted  at  a  referen- 
dum election  to  collect  all  taxes  for  State  and  city 
purposes  from  a  single  tax  on  land.  Everything  else 
was  eliminated  from  the  tax  system  of  the  State. 
And  the  measure  received  250,000  votes.  In  1909 
Lloyd  George  carried  through  his  budgetary  pro- 
posals in  Great  Britain  which  provided  for  a  greatly 
increased  tax  on  land  values,  although  this  measure 
was  conj&ned  for  the  most  part  to  city  land.  In 
Germany  Adolph  Wagner,  the  great  financial  ex- 
pert, has  been  urging  the  taxation  of  land  values, 
and  over  three  hundred  cities  have  adopted  what  is 
in  effect  a  heavy  tax  on  land  values,  although  the 
German  land  taxes  are  in  the  nature  of  a  tax  on  the 
"unearned  increment"  or  speculative  increase  in 
land  values  rather  than  a  tax  on  the  capital  value 
of  the  land  which  is  here  proposed.  Most  of  the 
provinces  and  cities  of  Australia  have  adopted  the 
measure  in  part  as  shown  in  a  previous  chapter. 
And  the  reports  from  Australia  indicate  that  it  has 
checked  speculation,  led  to  the  breaking  up  of  the 
great  landholdings,  and  aided  the  conmiunities  in 


234  THE  HIGH  COST  OF   LIVING 

cariying  through  the  farm-colony  programme  which 
has  been  greatly  extended  in  these  countries. 

When  the  war  is  over  it  seems  probable  that  all 
of  the  warring  countries  in  Europe,  as  well  as  Can- 
ada and  Australia,  will  be  forced  by  necessity  to 
resort  to  the  taxation  of  land,  not  only  as  a  fiscal 
measure  but  as  a  means  of  rehabilitating  the  state 
and  of  finding  homes  for  the  returning  soldiers. 

Not  only  will  the  taxation  of  land  values  end 
speculation  and  break  up  land  monopoly,  it  will 
automatically  determine  the  size  of  farms.  In  some 
localities  where  truck-farming  is  the  rule  farms  will 
be  small.  They  may  be  of  not  more  than  10  or 
20  acres.  In  other  sections  there  will  be  farms  of 
from  40  to  50  acres  that  can  be  cultivated  by  a 
single  man,  while  in  the  grazing  States  of  the  West 
the  land  wiU  be  divided  into  cattle-ranges  much  as 
it  is  to-day.  For  men  will  take  only  such  land  as 
they  can  profitably  use.  The  taxes  will  not  be  ad- 
justed to  the  amount  of  land.  They  will  be  ad- 
justed to  the  value  of  the  land.  Taxes  will  be  low 
on  land  of  little  value.  They  will  be  high  on  land 
about  the  city  or  of  high  fertility.  The  basis  of  the 
tax  is  the  value,  not  the  amount,  of  land.  And  the 
value  of  land  is  always  determined  by  its  location, 
its  fertility,  its  value  to  society. 

Under  the  proposal  men  would  only  pay  for  what 
society  gives  them.  They  will  pay  for  advantages 
enjoyed  in  location,  in  the  inherent  value  of  the 


OPENING  UP  THE  LAND  235 

land,  in  the  values,  in  fact,  which  society  itself  has 
created.  On  the  other  hand,  everything  that  labor 
produced  would  be  free.  It  would  be  untaxed  by 
the  city  or  the  State. 

The  freeing  of  the  land  from  speculation  will  also 
bring  about  that  condition  of  fluidity  of  labor  re- 
ferred to  earlier  in  this  chapter.  Men  will  be  able 
to  leave  the  city  who  are  weary  of  city  life  with 
something  of  the  ease  with  which  they  now  leave 
the  farm.  The  man  with  a  few  hundred  dollars 
can  then  have  a  fling  at  farming  with  but  little 
risk.  And  with  cheap  land  working  in  co-operation 
with  cheap  credit  supplied  by  the  farm-loan  boards 
the  chief  obstacles  to  the  tenant,  the  agricultural 
worker,  and  city  dweller  will  be  removed  and  men 
will  be  able  to  pass  to  the  land  almost  as  easily  as 
the  country-bred  boy  now  passes  to  the  mill  or  the 
factory.  Then  society  will  have  a  wonderful  fluidity. 
Men  will  no  longer  live  in  fear.  They  can  go  to  the 
land  if  they  choose  to  do  so.  They  can  look  forward 
to  old  age  with  courage  and  equanimity. 

Under  such  conditions,  too,  the  farm  would  soon 
lose  its  isolation.  Farm  colonies  such  as  are  being 
developed  in  many  countries  would  be  the  natural 
form  of  organization.  Men  would  live  close  to- 
gether from  choice,  as  they  do  in  the  farming  vil- 
lages that  are  found  all  over  Europe.  For  the  iso- 
lated farm  is  traceable  to  the  fact  that  men  are 
always  seeking  to  get  as  much  land  as  possible. 


236  THE  HIGH  COST  OF  LIVING 

But  with  land  held  only  for  use  men  would  take 
only  as  much  as  they  themselves  could  cultivate. 
For  the  agricultural  worker  would  become  an  owner. 
He  would  work  for  himself.  So  would  the  present 
tenant.  For  the  opening  up  of  land  to  use  and  its 
most  profitable  use  would  automatically  end  ten- 
ancy just  as  it  would  end  the  surplus  labor  which 
now  permits  the  farmer  to  hold  more  land  than  he 
himself  can  cultivate. 

The  taxation  of  land  values  would  be  to  America 
like  the  discovery  of  a  new  continent.  It  would 
open  up  hundreds  of  millions  of  acres.  It  would 
greatly  increase  production.  It  would  solve  the 
food  problem  and  the  high  cost  of  living.  For  free 
home-owning  proprietors  would  be  able  to  co- 
operate as  they  are  not  able  to  do  to-day.  They 
would  have  a  sense  of  independence  and  freedom 
that  is  only  foimd  in  countries  where  peasant  pro- 
prietorship prevails.  For  free  land  makes  free  men. 
It  is  the  home-owning  peasant  that  explains  the 
democracy  of  France.  It  is  the  home-owning  peas- 
ant that  explains  the  democracy  of  Switzerland, 
Holland,  and  Denmark.  Wherever  the  relations  of 
the  people  to  the  land  is  on  a  basis  of  ownership 
rather  than  of  tenancy  there  we  find  liberty,  freedom, 
and  democracy.  For  a  home-owning  people  are  a 
free  people — free  politically,  socially,  industrially. 

And  what  is  time  of  agricultural  land  is  true  of 
the  mineral  resources,  timber-land,  and  city  land 


OPENING  UP  THE  LAND  237 

as  well.  As  has  been  shown,  a  handful  of  men  own 
105,600,000  acres  of  timber-land.^  They  control 
the  price  of  timber  and  Imnber  products  as  well. 
The  iron  ore  of  the  country  is  owned  by  a  half- 
dozen  iron  and  steel  corporations  that  acquired  it 
as  waste  land  or  at  a  very  low  figure.  They  have 
capitalized  it  for  billions  of  dollars.  The  anthra- 
cite coal  of  Pennsylvania,  the  bituminous  coaJ  of 
Ohio,  West  Virginia,  Indiana,  Illinois,  Colorado, 
and  the  West  and  South  is  also  owned  by  a  few 
great  corporations.  The  same  is  true  of  the  oil 
and  the  natural  gas.  It  is  true  of  copper  and 
other  natural  deposits  as  well.  And  within  a  gen- 
eration's time  these  deposits  placed  in  the  ground 
by  natiu-e  have  become  the  private  possession  of 
monopolies  which  fix  the  prices  we  pay  for  almost 
every  necessity  of  life.  The  land  in  the  city,  whose 
increasing  value  is  the  explanation  of  high  rents 
and  tenement  conditions,  is  enriching  its  owners 
year  by  year  by  the  growth  of  population  and  the 
needs  of  society. 

Taxation  is  an  easy  means  of  ending  these  monop- 
oHes  as  it  is  of  ending  the  monopoly  of  agricultural 
land.  A  slight  tax  on  the  millions  of  acres  of  timber- 
land  owned  by  the  Southern  Pacific  Railroad  or  the 
Weyerhauser  S3aidicate  would  end  the  timber  mon- 
opoly. It  would  force  the  owners  to  sell.  They 
would  have  to  let  go  their  holdings  to  meet  the  de- 

» See  Chapter  XVIII,  p.  209. 


238  THE  HIGH  COST  OF  LIVING 

mands  of  the  tax-gatherer.  And  when  it  is  con- 
sidered that  a  great  part  of  these  colossal  holdings 
were  obtained  by  fraud,  fraud  so  universally  ad- 
mitted that  it  is  not  even  denied  in  the  West,  the 
justice  of  such  a  retaking  of  a  portion  of  the  nation's 
resources  should  not  be  open  to  question.  The 
Standard  Oil  Company  holds  great  stretches  of  land 
under  lease  which  it  does  not  develop.  The  coal 
corporations  and  railroads  have  immense  hold- 
ings of  coal  land  that  they  hold  out  of  use  as  a 
means  of  keeping  up  the  price  of  that  which  is  pro- 
duced. If  these  hoardings  were  taxed  at  their 
capital  value,  at  the  value  for  which  they  have 
been  capitalized  by  their  owners,  they  would  have 
to  be  developed  or  be  sold  to  some  one  who  would 
develop  them. 

Lower  rents  would  follow  more  houses.  And 
more  houses  would  follow  the  ending  of  land  specu- 
lation. There  would  be  more  coal  and  timber  pro- 
duced if  those  who  owned  these  resources  had  to 
develop  them  to  pay  the  taxes.  And  the  high 
cost  of  living  is  not  a  problem  of  food  alone.  It  is 
a  problem  of  better  homes,  of  more  comforts,  of  a 
higher  standard  of  living  as  well.  And  far  more 
important  than  the  freeing  of  the  means  of  distri- 
bution from  monopoly  control  is  the  creation  of  such 
conditions  of  economic  freedom  that  the  wealth  in 
the  land  will  be  opened  up  to  man  and  the  resources 
now  held  out  of  use  will  be  released  to  labor. 


OPENING  UP  THE  LAND  239 

What  society  really  wants  is  more  wealth  and  a 
more  equitably  distributed  wealth.  We  want  more 
food,  more  houses,  more  clothes,  more  fuel,  more  of 
the  comforts  and  necessities  of  life.  And  the  aim  of 
society  should  be  to  increase  the  production  of  these 
things  and  then  see  that  those  who  produce  them  re- 
ceive the  full  result  of  their  labor.  These  should  be 
the  first  and  most  important  aims  of  government. 
Possibly  if  these  two  functions  were  properly  per- 
formed there  would  be  but  little  need  for  jails,  for 
prisons,  for  institutions  of  all  kinds.  Possibly  the 
improvement  in  the  condition  of  the  people  would 
be  so  marked  that  the  evil  conditions  under  which 
so  large  a  portion  of  the  people  live  would  pass 
away  and  a  new  kind  of  society  would  come  mto 
existence  born  of  the  absence  of  poverty,  of  igno- 
rance, of  fear. 

And  the  opening  up  of  the  resources  of  America 
to  use  would  increase  the  wealth  produced  as  would 
no  other  change  in  our  economic  life.  For  if  the 
land  and  the  mineral  resources,  the  timber-land,  and 
the  sites  for  homes  in  the  cities  and  suburbs  were 
freed  from  the  dead  hand  of  idle  ownership  there 
would  be  a  marvellous  increase  in  the  wealth  pro- 
duced and  an  even  more  mai'vellous  change  in  its 
distribution.  What  we  most  need  is  a  new  freedom 
in  agriculture,  in  industry,  in  labor.  And  that  will 
come  when  means  are  applied  for  the  ending  of  the 
monopoly  which  now  prevails. 


CHAPTER  XXII 
THE  FARMER  AND  THE   BANKER 

Up  to  the  passage  of  the  Farm  Loan  act  for  the 
advancement  of  money  to  farmers  at  low  rates  of 
interest  and  on  long-term  mortgages  the  farmer  was 
in  an  almost  hopeless  position  in  so  far  as  credit 
was  concerned.  But  the  Farm  Loan  act  offers  no 
reHef  to  the  would-be  farmer  who  wants  to  buy 
land  nor  yet  to  the  tenant  who  has  no  real  estate 
to  offer  as  security. 

Credit  is  as  vital  to  agriculture  as  it  is  to  industry. 
The  farmer  must  borrow  a  part  of  the  purchase 
price  to  acquire  his  land.  He  must  borrow  to  build, 
to  drain,  to  clear,  to  improve.  He  must  borrow 
for  farm  implements,  to  plant  his  crop,  and  even 
to  pay  wages  for  harvesting.  But  the  whole  fab- 
ric of  credit,  with  the  exception  of  the  reHef  now 
available  to  owning  farmers  through  the  farm-loan 
banks,  is  organized  against  the  farmer.  He  is 
more  discriminated  against  than  any  class  of  bor- 
rowers. Yet  a  properly  organized  system  of  bank- 
ing would  make  the  promotion  of  agriculture  a 
matter  of  first  concern.  Credit  in  the  United 
States  is  so  controlled  that  the  interests  which  need 
credit  the  least  command  it  most  readily  and  on 

240 


THE  FARMER  AND  THE  BANKER   241 

the  lowest  terms.  Money  can  be  borrowed  for 
speculation  on  the  New  York  Stock  Exchange  at 
from  2  to  3  per  cent.  The  wheat  speculators,  food 
speculators,  and  middlemen  of  Chicago,  Minneapolis, 
and  elsewhere  have  every  facility  extended  to  them 
by  the  banks.  Credit  to  the  exi;ent  of  billions  can 
be  had  for  speculation,  yet  Stock  Exchange  credits 
are  not  used  for  production  at  all.  They  serve  no 
really  useful  purpose.  They  are  extended  for 
gambling  purposes;  for  the  purchase  and  holding 
of  stocks  and  securities.  Money  for  sky-scrapers, 
for  industry,  and  loans  on  commercial  paper  is 
available  at  from  4  to  6  per  cent,  and  in  un- 
limited quantities.  Yet  the  farmer,  when  he  comes 
to  market  the  most  secure  of  all  commodities, 
wheat,  corn,  cattle,  and  the  produce  of  the  farm, 
has  to  beg  for  assistance,  while  the  tenant  farmer, 
the  man  who  most  needs  encouragement,  has  to 
pay  loan-shark  rates  to  secure  any  credit  at  all. 

Here  is  another  obstacle  to  agriculture.  Here  is 
a  further  economic  explanation  of  the  decay  of 
farming.  The  farm-loan  banks  have  relieved  the 
owning  farmer  who  has  security  to  offer.  He  can 
now  borrow  at  5  per  cent,  interest  and  on  long- 
term  loans.  No  longer  need  he  go  to  the  local  banks, 
the  broker,  or  the  private  money-lender.  And  this 
will  aid  in  checking  the  drift  to  tenancy  and  alien 
farm  ownership  which  is  largely  traceable  to  fore- 
closures.   But  nothing  has  been  done  to  aid  the 


242  THE  HIGH  COST  OF  LIVING 

would-be  farmer  who  has  nothing  to  offer  but  his 
labor.  There  is  no  provision  for  the  tenant  farmer 
except  such  as  he  secures  from  the  local  banks  or 
the  store  which  has  a  claim  upon  his  produce. 
And  the  extortion  of  the  banks  and  money-lenders 
of  the  South,  the  Southwest,  and  the  West  is  al- 
most incredible. 

The  Comptroller  of  the  Currency  has  investigated 
usury  and  the  excessive  rates  charged  by  the  banks. 
A  similar  investigation  was  made  by  the  Commission 
on  Industrial  Relations.  In  the  South  and  West  the 
tenant  farmer  is  continually  in  debt.  He  rarely  es- 
capes. 

An  elaborate  report  of  the  practices  of  the  banks 
in  Oklahoma  was  made  to  the  Comptroller  of  the 
Currency  by  Judge  L.  C.  McNabb,  of  the  county 
court  of  Sequoyah  County.  It  describes  how  the 
bankers  and  money-lenders  keep  the  farmer  in 
bondage,  of  how  they  increase  the  rates  and  com- 
missions, of  how  the  farmer  once  involved  is  rarely 
permitted  to  get  free,  and  how  as  a  result  his  farm 
is  finally  foreclosed  and  he  is  reduced  to  the  posi- 
tion of  tenant  or  farm-laborer.  Probably  in  no  State 
in  the  Union  have  the  banks  contributed  more  to 
the  destructio  nof  home  ownership  than  in  Okla- 
homa which  a  few  years  ago  was  one  of  the  richest 
agricultural  States  in  the  nation.^ 

The  farmer,  says  Judge  McNabb,  usually  makes 

1  Report  of  Comptroller  of  the  Currency,  1915,  pp.  218^. 


THE  FARMER  AND  THE  BANKER   243 

his  first  loan  just  before  the  spring  planting,  that 
is,  in  February  or  March,  in  order  to  put  in  his 
crop.  He  has  to  sign  a  mortgage  on  his  horses  and 
some  75  or  100  acres  of  his  land.  The  banker  in- 
sists that  he  must  plant  nearly  all  of  his  land  in 
cotton,  in  which  crop  the  banker  sees  the  most 
money,  even  if  it  would  be  more  to  the  farmer's 
advantage  to  plant  some  of  it  in  grain.  Finally, 
he  receives  $200  as  a  loan  and  makes  out  his 
note  for  $237.50,  payable  at  "potato-digging"  time, 
about  July  1.  He  is  thus  pa3dng  interest  at  the 
rate  of  55  per  cent,  per  annum.  He  has  no  ready 
money  on  July  1,  for  he  has  planted  no  potato  crop 
and  never  intended  to  do  so.  But  the  banker  gra- 
ciously allows  him  to  renew  his  note,  although  com- 
plaining about  the  difficulty  of  getting  money. 
The  rate  of  interest  is  now  greatly  increased.  The 
farmer's  note  now  reads  $287.50,  payable  October 
1,  which  is  an  interest  rate  of  100  per  cent,  per 
annum.  On  October  1  the  process  is  repeated,  for 
the  farmer  still  has  no  ready  money,  although  he 
has  now  begun  picking  his  cotton  crop.  He  hast- 
ens the  picking,  takes  some  of  the  crop  to  town,  and 
pays  off  a  considerable  portion  of  the  loan.  On  the 
remainder  he  pays  $10  a  month  for  each  monthly 
extension,  which  usually  amounts  to  an  interest  rate 
of  about  60  per  cent,  a  year.  During  the  fall  and 
winter  he  again  pays  off  some  of  the  principal  but 
extends  the  rest,  a  process  which  goes  on  through 


244  THE  HIGH  COST  OF  LIVING 

the  picking  season  till  the  year  is  up  and  it  is  again 
February  or  March  and  he  must  borrow  anew  to 
plant  his  crop.  Had  he  put  forth  his  best  efforts 
he  could  have  paid  the  whole  note  in  full  during 
the  picking  season,  but  the  banker  flattered  him 
upon  his  good  credit  and  encouraged  him  not  to 
pay  up  in  full.  By  March,  then,  he  has  paid  $137.50 
in  interest  on  the  original  loan,  but  finds  that  he 
still  owes  $100  on  the  sum  first  borrowed. 

The  new  note  now  must  be  $300  and  interest.  It 
is  made  out  for  $347.50,  due  July  1,  with  promises 
of  extensions.  When  he  renews  in  July  he  signs  for 
$397.50,  payable  October  1.  Again  he  makes  pay- 
ments on  the  principal  in  the  fall  and  pays  $10  a 
month  for  each  renewal  on  the  remainder.  But  his 
family  needs  clothes  and  other  things  and  he  has 
to  keep  most  of  the  money  he  gets  for  his  crop. 
When  the  cotton  is  all  gathered  in  the  middle  of 
the  winter  he  finds  he  owes  $200.  Of  this  sum 
$147.50  is  interest,  of  which  $50  has  been  paid  in 
five  monthly  "extensions"  besides  the  $97.50  on 
the  face  of  the  note. 

In  March  this  $200  must  be  added  to  the  $200 
he  needs  to  make  his  crop.  He  now  no  longer  finds 
the  banker  gracious.  In  fact,  he  is  threatened  for 
not  having  paid  more  on  his  old  notes,  and  fore- 
closure is  broadly  hinted  at.  The  farmer  is  now 
thoroughly  frightened  and  glad  if  the  banker  will 
let  him  have  further  credit  on  almost  any  terms. 


THE  FARMER  AND  THE  BANKER   245 

He  makes  out  his  note  for  $487.50,  payable  July  1. 
When  he  comes  for  his  renewal  in  July  the  banker 
agrees,  provided  a  cold  $75  interest  is  added.  The 
note  now  reads  $562.50,  containing  75  per  cent, 
compound  interest.  The  poor  farmer  becomes 
discouraged  and  loses  hope  of  pajdng  all  he  owes. 
He  tries  desperately  to  borrow  money  from  other 
sources.  He  is  now  closely  watched  by  the  banker 
for  fear  that  he  will  try  to  "beat  it."  Now  he  must 
bring  practically  all  he  gets  for  his  crop  to  the  bank 
and  fairly  beg  for  enough  to  clothe  and  feed  his 
family,  who,  by  the  way,  have  all  worked  hard 
gathering  the  crops  and  have  received  no  reward 
beyond  their  barest  necessities.  In  desperation 
he  finally  does  try  to  "beat  it,"  and  steals  out  some 
of  his  cotton  to  sell  to  people  who  are  looking  out 
for  just  such  opportunities.  During  all  this  time 
the  note  has  been  reduced  only  to  $300.  He  can 
get  no  more  credit  at  the  bank,  although  he  may 
succeed  in  borrowing  enough  from  friends  to  make 
his  next  crop.  Meantime,  he  has  had  to  renew  the 
old  note  again  at  ruinous  interest,  which  makes  it 
$466.50.  In  the  fall  the  banker  takes  as  much  of 
the  proceeds  of  his  crop  as  possible,  and  yet,  after 
the  season's  picking,  the  farmer  still  owes  $400. 
His  chattels  are  now  demanded,  advertised,  and 
sold  at  public  auction,  and  the  farmer  is  ruined. 

Mr.  McNabb  says  there  are  thousands  of  such 
cases  in  Oklahoma  alone.    Those  who  fight  against 


246  THE  HIGH  COST  OF  LIVING 

the  system  are  ruined  politically.  The  banks,  by 
standing  together,  can  put  up  and  elect  their  own 
man  as  State  treasurer.  Honest  bankers,  he  says, 
are  the  great  exception  in  Oklahoma,  for  the  system 
is  such  that  good  men  are  driven  away  from  it. 

Usuiy  is  practised  on  a  vicious  scale  all  over 
this  part  of  the  country.  An  investigation  of 
conditions  was  made  by  the  Comptroller  of  the 
Currency  in  1915.^  His  report  showed  that  on 
loans  of  small  amounts,  such  as  the  tenant  farmer 
is  compelled  to  accept,  the  interest  rates  rose  as 
high  as  100,  200,  and  in  small  sums  as  high  as  2,000 
per  cent.  In  some  sections  the  banks  have  been 
charging  rates  that  were  ruinous  to  their  customers. 
A  Texas  national  bank  with  a  surplus  and  capital 
of  $250,000  in  a  city  of  15,000  sent  to  the  Comp- 
troller, in  response  to  a  special  request,  a  statement 
of  all  loans  made  by  it  between  August  1,  1914,  and 
November  27,  1914,  upon  which  the  interest  was 
more  than  8  per  cent,  per  annum.  The  statement 
showed  that  the  rate  charged  by  this  bank  ranged 
anywhere  from  20  to  100  per  cent,  on  short-term 
paper.  In  general  the  high  interest  rates,  which 
sometimes  exceeded  100  per  cent.,  were  on  the 
smaller  loans,  while  notes  for  $1,000  or  over  rarely 
paid  more  than  10  per  cent,  or  15  per  cent,  interest. 
As  a  matter  of  fact,  the  extortionate  interest  rates 
were  almost  all  to  the  most  necessitous  borrowers, 
who  were  for  the  most  part  tenant  farmers.     In- 

^  Annual  Report  of  the  Comptroller  of  the  Currency,  1915,  p.  23. 


THE  FARMER  AND  THE  BANKER   247 

terest  rates  of  10  per  cent.,  20  per  cent.,  and  30  per 
cent,  were  so  common  as  to  seem  to  be  the  rule  in 
this  bank. 

In  June,  1915,  a  number  of  national  banks  in 
the  South  and  Southwest  were  required  by  the 
Comptroller's  office  to  make  a  report  of  all  loans 
made  by  them  between  May  1,  1915  (the  date  of 
the  last  previous  statement),  and  June  23,  1915, 
on  which  the  interest,  discount,  or  commission  was 
12  per  cent,  or  more,  providing  the  amount  of  the 
interest,  discount,  or  commission  exceeded  $.50. 
At  this  period  money  was  particularly  easy  to  get, 
so  that  it  is  safe  to  infer  that  the  rates  charged  by 
the  banks,  excessive  as  they  were,  were  probably 
not  so  high  as  they  had  been  during  the  preceding 
twelve  months.  The  reports  in  each  case  were 
made  under  oath  by  executive  officers  of  the  banks. 
Most  of  the  banks  under  investigation  were  in  small 
towns  in  Georgia,  Louisiana,  Texas,  and  Oklahoma. 
Names  of  banks  and  of  borrowers  are  omitted  in 
the  Comptroller's  report. 

Of  the  105  loans  reported  by  a  certain  national 
bank  in  Texas,  in  a  town  of  2,000,  71  bore  interest 
at  25  per  cent,  or  more.  Four  were  at  100  per  cent, 
or  more.  A  national  bank  in  Oklahoma  reporting 
112  loans  at  rates  exceeding  12  per  cent,  admitted 
that  84  of  them  bore  interest  at  25  per  cent,  or  more. 
In  15  cases  the  rate  exceeded  100  per  cent.,  in  one 
instance  even  reaching  514  per  cent,  on  a  small 
sum  loaned  for  seven  days. 


248  THE  HIGH  COST  OF  LIVING 

As  part  of  the  exhibits  in  its  investigation  of 
usurious  interest,  the  Comptroller's  office  asked  a 
certain  national  bank  for  the  record  of  its  loans 
to  one  particular  borrower  chosen  at  random  from 
a  number  to  whom  a  series  of  loans  had  been  made. 
The  bank  was  requested  to  send  in  a  list  of  all  the 
loans  made  to  this  borrower  during  the  preceding 
twelve  months.  The  bank  submitted  under  oath 
a  list  of  29  loans  made  to  the  borrower,  a  woman 
living  on  a  farm  six  or  seven  miles  from  the  town 
in  which  the  bank  was  located.  The  loans  were 
all  for  small  sums  and  on  short  time,  the  largest 
amount  being  $620,  which  was  borrowed  for  twenty- 
three  days.  The  interest  rate  on  the  29  loans  ranged 
from  36  per  cent,  to  2,000  per  cent,  per  annum. 
Of  the  29  loans  21  bore  interest  at  the  rate  of  100 
per  cent,  or  more.  Fortunately,  in  this  case  the 
borrower  was  able  to  pay  all  the  notes  in  full. 

One  Oklahoma  bank  in  its  list  of  loans  at  interest 
rates  exceeding  12  per  cent.,  issued  from  January  1, 
1915,  to  November  10,  1915,  reported  184  at  rates 
exceeding  150  per  cent.,  75  of  which  were  at  rates 
exceeding  300  per  cent.  Thirty-three  paid  interest 
charges  of  500  per  cent,  per  annum  or  more.  In  the 
town  in  which  this  bank  is  situated  there  are  two 
national  banks  and  two  State  banks,  and  one 
might  suppose  that  competition  would  reduce  these 
high  rates.  But  the  borrower  apparently  derives 
no  benefit  from  any  such  competition.    The  list  of 


THE  FARMER  AND  THE  BANKER   249 

loans  submitted  by  the  other  national  bank  in  this 
town  showed  no  more  moderate  rates  of  interest 
than  in  the  first  bank. 

Another  Oklahoma  national  bank,  in  its  sworn 
statement,  reported  that  the  lowest  rate  charged  by- 
it  on  loans  between  September  2, 1915,  and  Novem- 
ber 10,  1915,  was  10  per  cent.  Its  average  on  all 
loans  issued  dming  this  period  was  25  per  cent.  In 
another  national  bank  the  average  interest  rate  was 
36  per  cent,  and  in  a  third  40  per  cent.,  the  rates 
at  this  bank  ranging  from  a  minimum  of  8  per  cent, 
to  a  maximum  of  300  per  cent. 

Here  again  are  reasons  why  men  do  not  become 
farmers  and  why  those  who  do  so  often  fail.  The 
wonder  is  that  agriculture  has  not  been  more  com- 
pletely destroyed  than  it  is.  Free  seeds  will  not 
help  these  evils.  Nor  will  education.  The  eco- 
nomic foundations  of  agriculture  have  been  neglected. 
The  farmer  has  been  compelled  to  fight,  unaided  and 
alone,  against  such  odds  that  he  is  discouraged  and 
often  in  despair.  If  the  evidences  of  the  Commis- 
sion on  Industrial  Relations,  if  the  evidences  of  a 
casual  traveller  in  the  South  and  Southwest  can  be 
accepted  as  representative,  then  there  is  the  most 
urgent  need  of  a  comprehensive  programme  of  na- 
tional and  State  legislation  for  the  protection  of  the 
farmer  and  a  big,  constructive  programme  on  the 
whole  subject  of  agriculture  as  well. 


CHAPTER  XXIII 
A  NEW  AGRICULTURAL  PROGRAMME 

Reference  has  been  made  in  previous  chapters 
to  the  experiments  of  Denmark  and  Australia  on 
the  control  of  the  food  supply  and  the  development 
of  agriculture  along  new  lines.  These  countries 
have  worked  out  a  comprehensive  programme  for 
the  ending  of  tenancy,  for  easy  credit,  for  placing 
men  upon  the  farm,  and  for  aiding  them  in  many 
ways  in  the  marketing  of  their  produce.  Germany 
has  adopted  a  similar  policy,  and  several  hundred 
thousand  persons  have  been  placed  on  the  land  as 
home-owning  farmers.  Even  Russia  had  a  big  pro- 
gramme in  process  of  development  before  the  com- 
ing of  the  war,  while  Great  Britain  has  spent  hun- 
dreds of  millions  in  the  conversion  of  the  Irish  ten- 
ant into  a  contented  home-owner. 

As  a  result  of  these  efforts  tenancy  has  all  but 
disappeared  in  Denmark,  while  in  Ireland  home- 
owning  will  soon  be  the  rule.  Denmark  has  become 
the  world's  agricultiu-al  experiment  station.  There 
is  little  emigration  from  that  country.  The  peo- 
ple are  too  prosperous  at  home.  To  such  an  extent 
has  education  been  carried,  and  so  fully  protected 

250 


A  NEW  AGRICULTURAL  PROGRAMME      251 

is  the  farmer  in  the  marketing  of  his  produce  through 
the  thousands  of  co-operative  societies  that  are 
found  in  that  country,  that  a  man  is  able  to  make  a 
comfortable  Hving  from  a  few  acres  of  land. 

Since  the  war  broke  out  nearly  all  of  the  warring 
nations  of  Europe  have  worked  out  more  or  less  com- 
prehensive agricultural  policies,  all  following  sub- 
stantially the  same  lines  and  all  looking  to  financial 
and  other  support  from  the  state.  And  all  of  these 
projects  include  cheap  credit,  long-term  loans,  and 
the  purchase  and  sale  of  land  for  farming  purposes 
by  the  state. 

As  long  ago  as  1903,  Great  Britain  undertook  a 
solution  of  the  Irish  question  by  the  subdivision  of 
the  great  estates  owned  by  the  EngHsh  gentry.  In 
thirteen  years  the  government  has  expended  $550,- 
000,000  in  the  purchase,  subdivision,  and  settlement 
of  9,000,000  acres  of  land,  or  about  one-third  of  the 
total  area  of  Ireland.  An  unhappy,  poverty-stricken 
country  is  being  converted  into  a  nation  of  home- 
owning  farmers.  It  is  expected  that  by  1920 
tenancy  will  have  almost  ceased  to  exist,  at  vir- 
tually no  cost  to  the  empire.  The  money  appro- 
priated for  the  purpose  is  being  repaid  by  the  pur- 
chasers in  instalments,  with  interest.  A  royal  com- 
mission for  England  and  Scotland  is  now  engaged 
in  making  a  census  of  estates  and  is  framing  a  law 
under  which  land  will  be  subdivided  and  sold  to 
returning  soldiers  at  the  close  of  the  war. 


252  THE  HIGH  COST  OF  LIVING 

In  the  five  years  prior  to  the  war  Germany  ap- 
propriated over  $200,000,000  in  buying  and  pre- 
paring farms  for  settlers.  Waste  land  was  reclaimed. 
In  the  years  prior  to  1907  the  number  of  holdings 
under  5  acres  in  extent  increased  by  316,678,  while 
in  the  same  period  holdings  over  100  acres  de- 
creased by  20,744.  It  is  said  that  in  the  neighbor- 
hood of  three-quarters  of  the  agricultural  land  in 
the  empire  is  now  in  small  holdings.  This  work  is 
carried  on  under  a  settlement  commission.  Even 
the  great  estates  in  East  Prussia,  Posen,  and  Pome- 
rania  are  being  parcelled  out,  much  as  was  done  by 
Stein  and  Hardenberg  a  hundred  years  ago.  Speak- 
ing of  this  policy,  the  official  report  on  land  settle- 
ment says: 

"The  existence  of  such  large  landed  estates  [as 
those  of  East  Prussia]  not  only  hinders  the  national 
progress  of  the  peasant  class,  but,  greatest  evil  of 
all,  it  is  the  principal  cause  of  the  diminishing  popu- 
lation of  agricultural  territories,  because  the  work- 
ing classes,  finding  no  chances  of  moral  or  economic 
improvement,  are  driven  to  emigrate  to  the  great 
cities  and  manufacturing  districts.  Scientific  re- 
searches also  prove  that  small  farms  nowadays  are 
more  profitable  than  large,  above  all,  small  live-stock 
improved  farms,  the  importance  of  which  for  the 
nutriment  of  the  people  is  constantly  increasing. 

''In  1913  the  German  Government  provided  for 
the  compulsory  purchase  of  70,000  acres  of  land. 
Speaking  of  the  areas  which  were  subdivided,  it  was 
stated:  'Where  formerly  there  had  been  at  one  end 


A  NEW  AGRICULTURAL  PROGRAMME      253 

of  the  social  scale  a  few  rich  landowners,  often  non- 
residents and  exercising  an  undue  political  influence, 
and  ai  the  other  end  a  large  number  of  poverty- 
stricken  and  discontented  peasants  and  farm-labor- 
ers, there  is  now  a  great  middle  class  of  society, 
devoted  to  the  empire  for  what  it  has  done  for  its 
members.'" 


In  the  last  ten  years  the  Russian  Government 
improved  and  equipped  farms  for  3,000,000  settlers. 
It  contracted  in  the  United  States  for  millions  of 
dollars'  worth  of  farm  machinery  to  be  delivered 
after  the  war,  so  that  homes  could  be  provided  for 
the  returning  soldiers.  As  long  ago  as  1893  New 
Zealand  realized  the  evils  of  land  monopoly  and  farm 
tenancy.  The  first  experiment  was  very  successful, 
in  three  years'  time  the  number  of  people  on  a 
single  estate  having  been  increased  from  40  to  1,000. 
During  the  twenty  years  from  1893  to  1913  New 
Zealand  appropriated  $65,000,000  for  buying,  sub- 
dividing, and  settHng  large  estates.  During  these 
years  the  agricultural  population  grew  more  rapidly 
than  that  of  the  cities,  and  in  twenty  years'  time  it 
doubled.  When  the  present  war  began  New  Zea- 
land led  the  world  in  the  per-capita  value  of  its 
agricultural  exports. 

The  same  policy  has  been  followed  by  other 
Australian  states.  Since  1909  over  3,000,000  acres 
of  land  have  been  bought,  subdivided,  and  sold  to 
settlers,  and  over  $40,000,000  has  been  loaned  to 


254  THE  HIGH  COST  OF  LIVING 

the  colonists  by  the  state.  Speaking  of  these  re- 
sults of  this  settlement  policy,  the  premier  0/  Vic- 
toria, in  his  budget  speech  in  1914,  said: 

"The  settlement  policy  is  a  demonstrated  success. 
Over  large  areas  in  widely  separated  districts  more 
than  ten  times  as  many  families  are  settled  com- 
fortably under  attractive  social  conditions  as  were 
there  five  years  ago,  and  they  are  obtaining  returns 
from  their  holdings  that  even  less  than  five  years 
ago  were  regarded  as  impossible.  The  demonstra- 
tion that  famihes  can  be  fully  employed  and  obtain 
a  comfortable  living  on  from  20  to  40  acres  of  irriga- 
ble land  not  only  insures  the  financial  success  of 
our  investment  in  irrigation  works  but  gives  a  new 
conception  of  the  ultimate  population  which  this 
state  will  support  and  the  agricultural  wealth  it 
will  produce." 

The  land-settlement  policies  of  all  these  countries 
are  substantially  alike.  They  provide  for  the  pur- 
chase of  land  by  the  government  or  the  use  of  the 
public  domain.  The  land  is  divided  into  holdings 
which  can  be  cultivated  without  the  aid  of  other 
labor.  The  size  of  the  holdings  depends  upon  the 
nature  of  the  soil  and  the  kinds  of  crops  produced. 
Applicants  for  farm  ownership  are  examined  to  as- 
certain their  fitness  and  general  moral  worth.  The 
would-be  farmer  is  required  to  make  an  initial 
deposit  of  possibly  10  per  cent,  of  the  total  capital 
outlay  as  an  assurance  of  good  faith.  The  farm, 
when  sold,  is  equipped  with  a  dwelling  and  out- 


A  NEW  AGRICULTURAL  PROGRAMME      255 

buildings,  with  such  cattle  as  may  be  necessary, 
and  sufficient  working  capital  for  one  year's  opera- 
tion. Usually  the  farmer  is  not  required  to  pay 
interest  on  the  capital  cost  for  several  years.  Then 
from  3  to  4  per  cent,  interest  is  charged  and  1  per 
cent,  additional  for  the  ultimate  extinguishment  of 
the  debt  in  thirty  or  forty  years. 

Usually  the  state  co-operates  with  the  farmer  by 
providing  advice  and  supervision  from  experts  or 
from  the  agricultural  colleges.  Efforts  are  made  to 
locate  the  farmers  in  a  colony  or  village  so  that  the 
settlers  will  have  some  social  intercourse.  Schools 
are  provided,  and  recreation  as  well.  Farmers  are 
aided  to  organize  co-operative  buying  and  selling 
societies  so  that  they  can  acquire  goods  at  cost  and 
sell  in  the  best  markets. 

The  state-aided  settlements  in  all  these  countries 
have  been  a  success.  They  have  not  proved  a 
burden  to  the  taxpayers  in  any  country  where  the 
plan  has  been  carried  out.  In  some  instances  they 
have  earned  a  profit.  Under  the  stimulus  of  own- 
ership the  farmers  have  built  better  homes.  Own- 
ing only  sufficient  land  for  a  single  man  to  cultivate, 
they  have  brought  a  larger  acreage  under  cultiva- 
tion. They  have  improved  their  live  stock  and 
purchased  more  labor-saving  machinery.  They  have 
piped  water  to  the  dwellings  and  developed  irriga- 
tion projects.  The  number  of  live  stock  has  been 
so  largely  increased  in  New  Zealand — and  the  same 


256  THE  HIGH  COST  OF  LIVING 

is  true  of  other  countries — that  the  farmers  amor- 
tize their  loans  in  a  shorter  time  than  that  provided 
by  the  state.  The  Canadian  commission  says  of 
the  New  Zealand  experiment: 

"Throughout  the  country  a  higher  and  better 
civilization  is  gradually  being  evolved.  The  young 
men  and  women  who  are  growing  up  are  happy  and 
contented  to  remain  at  home  on  the  farm  and  find 
ample  time  and  opportunity  for  recreation  and  en- 
tertainment of  a  kind  more  wholesome  and  elevating 
than  can  be  obtained  in  the  city." 

When  the  war  is  over,  it  is  safe  to  assume  that 
most  of  the  countries  of  Europe  will  turn  their  at- 
tention to  the  intensive  cultivation  of  the  land. 
England  will  endeavor  to  feed  herself  instead  of 
being  dependent  upon  America  and  Denmark. 
The  Russian  revolution  will  open  up  hundreds  of 
millions  of  acres  of  land  to  the  peasants  of  that 
country.  Germany  will  undoubtedly  extend  farm 
colonization  projects  successfully  started  before  the 
war.  Canada  was  already  experimenting  with  this 
policy  as  well  as  with  the  taxation  of  land  values 
to  break  up  large  estates,  and  will  seek  to  lure 
settlers  not  only  from  Europe  but  from  the  United 
States.  Even  Mexico  has  worked  out  an  agri- 
cultural programme  in  some  of  her  states  patterned 
upon  the  experiments  in  Europe.  All  the  world 
will  compete  for  able-bodied  men  in  order  to  meet 
the  burdens  of  this  war  and  to  re-establish  their  in- 


A  NEW  AGRICULTURAL  PROGRAMME      257 

dustry  and  life.  And  partly  in  anticipation  of  these 
conditions,  the  State  of  California  has  created  a 
State  colonization  commission  which  is  projecting  a 
big  programme  for  the  colonization  of  home-own- 
ing farmers  in  that  State.  Legislation  has  been 
enacted,  and  an  appropriation  of  $250,000  has  been 
made  with  which  to  buy  a  large  tract  of  land.  The 
federal  farm-loan  board  is  to  be  asked  to  co-operate 
in  the  development  of  a  colony  as  described  above. 
It  is  planned  to  purchase  10,000  acres  of  land,  and 
with  the  aid  of  experts  to  determine  the  size  of  farms, 
the  kind  of  agriculture  to  be  adopted,  the  character 
and  grouping  of  houses  and  farm  buildings,  and  the 
educational,  recreational,  and  co-operative  agencies 
that  can  be  developed  in  connection  with  it.  The 
State  imiversity  is  co-operating  in  the  project.  It 
is  planned  to  limit  the  right  of  settlers  to  speculate 
by  restricting  the  right  to  sell  their  purchases.  The 
individual  farms,  fully  equipped,  are  estimated  to 
cost  about  $5,000,  to  be  paid  for  by  the  owners 
within  fifty  years'  time,  with  interest  at  the  rate  of 
4  per  cent.  A  minimum  capital  of  about  $1,500 
is  to  be  required  from  each  applicant,  a  large  part 
of  which  is  to  be  used  as  working  capital. 

A  similar  measure,  known  as  the  Grosser  bill, 
is  now  before  Congress.  It  looks  to  the  creation 
of  a  rotary  fimd  of  $10,000,000  for  the  purpose  of 
developing  farm  colonies,  the  farms  to  be  either 
sold  or  leased  to  settlers  under  terms  similar  to  those 


258  THE  HIGH  COST  OF  LIVING 

pro\aded  in  the  California  measure.  Public  lands 
and  reclamation  projects  will  be  used  for  the  pur- 
pose. It  has  been  suggested  that  the  money  de- 
posited in  the  postal  savings-banks  should  be  used, 
and  as  the  payments  by  settlers  come  in  from  year 
to  year,  that  the  fund  be  rotated,  and  that  new 
colonies  be  opened  in  different  parts  of  the  country 
to  serve  as  experiment  stations  for  States  or  private 
persons  that  are  willing  to  carry  out  similar  projects. 
The  State-aided  farm  colony  plan  does  not  fully 
meet  the  agricultural  problem.  It  does  not  solve 
the  difficulties  of  marketing  or  of  transportation. 
It  does  not  provide  cold-storage  warehouses  or 
terminals.  Nor  does  it  insure  cheap  land,  which  is 
essential  to  successful  agriculture.  It  does,  how- 
ever, lend  the  aid  of  science  to  agriculture.  It  does 
provide  education  and  direction  by  experts.  It 
offers  very  cheap  credit.  Most  important  of  all, 
ownership  awakens  ambition  and  hope.  It  insures 
permanency  of  tenure.  It  aims  to  re-establish  con- 
ditions similar  to  those  which  peopled  America  with 
immigrants  in  the  days  when  land  was  to  be  had  for 
the  asking,  and  places  agriculture  on  a  firmer  founda- 
tion of  security  than  that  which  now  prevails. 


CHAPTER  XXIV 
THE  NEW  ERA   IN  POLITICS 

The  old  order  has  gone,  never  to  return.  The 
war  has  discarded  the  economic  and  political  ideas 
which  have  dominated  our  life  for  three  centuries. 
The  laissez-faire  philosophy  that  the  government 
should  do  as  little  as  possible  is  a  thing  of  the  past. 
It  was  the  natural  and  the  inevitable  philosophy  of 
a  people  endowed  with  a  continent  so  rich  in  eveiy 
resource  that  we  felt  it  could  never  be  exhausted. 
We  could  hardly  wait  until  our  inheritance  had  been 
squandered. 

Unfortunately,  we  did  not  distinguish  between  the 
things  the  state  should  retain  and  the  things  that 
should  be  open  to  private  possession.  We  did  not 
distinguish  between  the  activities  which  the  state 
itself  should  perform,  if  it  desired  to  preserve  free- 
dom for  all,  and  the  acti\dties  which  could  be  left 
in  private  hands.  Had  we  done  so,  had  we  taken 
guidance  in  recent  years  from  the  experience  of 
other  countries,  we  would  not  now  be  facing  the 
gravest  problem  that  can  confront  a  nation. 

And  the  condition  of  agriculture  is  a  direct  conse- 
quence of  this  policy.  We  have  wasted  our  re- 
sources and  permitted  hundreds  of  millions  of  acres 

259 


260  THE  HIGH  COST  OF  LIVING 

of  land  to  pass  out  of  our  hands  into  the  possession 
of  speculators.  These  and  other  forces  are  de- 
stroying agriculture.  A  diminishing  agricultural 
population  means  diminishing  food  production.  In- 
creasing city  population  means  increasing  food  con- 
sumption. This  means  an  increasing  cost  of  living, 
an  increase  that  is  bound  to  continue  unless  a  vio- 
lent reversal  of  our  land  policy  is  brought  about. 
The  city  uses  up  people.  It  destroys  their  virility. 
The  country  is  the  great  vitalizing  force.  Yet  peo- 
ple are  being  crowded  off  the  land,  not  because  they 
are  unwilling  to  go  to  it,  but  because  our  land  laws, 
transportation  agencies,  inadequate  credit,  and  mar- 
keting facilities  are  gradually  stifling  the  agricultural 
life  of  the  nation  and  bringing  about  premature  ag- 
ricultural decay.  In  my  opinion  America  is  face  to 
face  with  the  gravest  kind  of  a  problem.  In  some 
respects  it  is  one  of  the  gravest  economic  problems 
that  has  confronted  the  country.  We  cannot  have 
a  healthy  life  unless  we  have  a  healthy  agriculture. 
We  cannot  have  healthy  agriculture  unless  econo- 
nomic  and  social  conditions  make  agriculture  attrac- 
tive. And  students  of  the  subject  are  coming  to 
see  that  this  can  only  be  brought  about  by  the  in- 
terposition of  the  government  in  an  intelligent, 
constructive,  and  scientific  way  to  protect  agricul- 
ture as  well  as  the  farmer  from  the  exploitation  from 
which  he  is  suffering. 
The  poHcy  we  have  pursued  has  brought  us  face 


THE  NEW  ERA  IN  POLITICS  261 

to  face  with  one  of  two  consequences.  Either  we 
will  travel  the  road  of  Rome  and  Great  Britain,  in 
which  countries  agriculture  was  destroyed  by  bad 
economic  conditions  permitted  or  created  by  the 
state,  or  we  will  dedicate  ourselves  courageously  to 
the  ending  of  the  abuses  and  apply  the  surgeon's 
knife  to  the  privileged  interests  that  have  gained 
such  control  of  the  economic  foundations  of  our  life 
that  farming  must  inevitably  cease  to  be  a  profitable 
occupation.  If  present  tendencies  continue  we  will 
not  be  able  to  feed  ourselves.  Food  prices  will  rise 
to  exorbitant  heights.  The  standard  of  living  of 
the  poor  and  even  of  the  well-to-do  will  be  lowered. 
The  future  of  the  United  States  is  involved  in  the 
agricultural  problem,  which  is  the  primary  industry 
on  which  the  life  of  the  state  depends. 

Bad  as  is  the  system  of  distribution,  costly  as  it 
is  to  the  consumer  and  to  agriculture,  it  is  far  less 
ominous  to  our  national  life  than  the  economic  con- 
ditions under  which  farming  is  compelled  to  be  car- 
ried on,  conditions  which  have  become  so  bad  that 
only  a  big,  revolutionary  change  of  attitude  by  the 
States  and  the  nation  will  save  it  from  decay  and  the 
farm  from  extinction. 

Rome  survdved  many  disasters;  she  could  not  sur- 
vive the  disappearance  of  husbandly  m  Italy.  It 
was  the  source  of  her  power.  When  the  Roman 
farmer  was  driven  from  the  land  and  crowded  into 
the  cities,  there  to  exist  by  such  labor  as  there  was, 


262  THE  HIGH  COST  OF  LIVING 

aided  by  state  doles,  the  nation  deteriorated  and 
with  it  the  moral  and  political  fibre  of  the  people. 
And  while  ancient  Rome  is  separated  by  two  thou- 
sand years  from  the  United  States,  the  causes  for 
the  decay  of  Roman  life  are  the  same  as  those  which 
are  undermining  the  farm  in  America  to-day. 

Great  Britain  has  passed  through  the  same  evo- 
lution and  for  the  same  reasons.  Two  centuries  ago 
England  was  self-contained.  She  fed  herself.  The 
English  yeoman  is  one  of  the  traditions  of  the  na- 
tion. Industry  came.  The  land  which  had  once 
been  owned  in  common  by  all  of  the  people  or  tilled 
under  a  system  of  freehold  or  easy  feudal  tenure, 
passed  into  great  estates,  which  were  let  out  to  ten- 
ants at  competitive  rents,  or  were  dedicated  to  sport 
or  to  grazing.  Year  by  year  the  number  of  people 
engaged  in  agriculture  diminished  and  year  by  year 
the  acreage  devoted  to  food  was  reduced.  Those 
who  owned  the  land  lived  from  the  profits  of  indus- 
try, shipping,  banking,  and  the  ground-rents  of  the 
cities.  They  were  indifferent  to  the  land,  because 
it  was  not  necessary  that  they  should  cultivate  it, 
while  the  laws  of  the  country  and  the  system  of  ten- 
ancy and  of  taxation  discouraged  free  ownership 
and  encouraged  the  idle  holding  of  the  land.  At  the 
present  time  one-half  of  the  land  of  England  is  owned 
by  2,500  persons,  while  scarcely  300,000  people  out 
of  43,000,000  have  any  interest  in  the  land  through 
ownership  at  all.     There  are  few  owning  farmers  in 


THE  NEW  ERA  IN  POLITICS  263 

England.  The  agricultural  population  is  a  tenant 
population.  The  same  thing  happened  to  Ireland, 
which  unhappy  coimtry  lost  one-half  of  its  people 
as  a  result  of  alien  landlordism  and  the  excessive 
rentals  which  were  exacted  from  the  cotters  by  the 
English  landlords,  who  lived  in  London  from  the 
rentals  of  their  estates.  Ireland  has  been  greatly 
improved  b}^  the  legislation  of  the  last  generation, 
under  which  a  large  part  of  the  land  has  been  ac- 
quired by  the  state  and  divided  into  small  holdings, 
which  are  sold  to  the  tenants  on  easy  terms.  But 
England  has  refused  to  extend  the  Irish  land  acts 
to  England,  Scotland,  and  Wales,  while  the  system 
of  taxation,  by  which  the  local  taxes  are  borne  by 
the  tenant,  while  the  land  itself  is  practically  free, 
has  placed  such  a  premium  on  idle  land  holding 
that  the  great-estate-owners  find  it  to  their  profit 
to  hold  land  out  of  use  or  to  cultivate  it  carelessly 
or  use  it  for  pleasure. 

As  a  result  of  the  land  and  taxation  laws  four 
persons  out  of  five  in  the  United  Kingdom  live  in 
cities.  Only  20  per  cent,  of  the  population  is  on 
the  land.  The  population  is  driven  to  the  towns, 
where  it  competes  with  the  labor  already  there, 
keeping  down  wages,  forcing  up  tenement  rents  and 
gradually  weakening  the  strength  and  fibre  of  the 
people.  Underlying  the  other  explanations  of  the 
condition  of  England  is  the  decay  of  agriculture, 
the  system  of  landownership  and  the  exclusion  of  the 


264  THE  HIGH  COST  OF  LIVING 

people  from  the  land.  This  has  not  only  made  her 
dependent  on  other  countries  for  her  food  supply,  it 
has  impaired  the  moral  and  physical  life  of  the 
nation. 

The  United  States  has  left  agriculture  a  prey  to 
the  same  economic  forces.  The  farmer  has  received 
but  little  consideration  in  legislation.  He  has  strug- 
gled in  vain  against  a  multitude  of  exploiting  agen- 
cies, on  the  one  hand,  while  the  economic  founda- 
tions of  agriculture  have  been  left  to  the  free  play  of 
economic  forces  that  have  gradually  placed  an  em- 
bargo upon  farming  and  made  it  almost  impossible 
for  the  would-be  farmer  to  gain  access  to  the  land 
and  make  a  decent  living  after  he  has  gotten  there. 

And  just  as  the  high  cost  of  living  waits  upon  a 
wide  extension  of  state  activities  to  free  the  dis- 
tributing agencies  of  the  country  from  private  mon- 
opoly, so  the  encouragement  of  agriculture  waits  on 
a  comprehensive  programme  of  legislation  to  free 
the  would-be  farmer  from  the  prohibitive  conditions 
that  now  discourage  farming. 

It  is  necessary  to  look  at  farming  from  a  new 
angle.  The  free  land  has  gone.  The  old  order  has 
ended.  The  new  order  involves  provision  for  a  new 
freedom.  It  involves  freer  access  to  the  land,  free- 
dom in  transportation,  cheap  credit,  and  a  new  or- 
ganization of  agriculture  along  socialized  lines,  so 
that  the  farmer  will  enjoy  the  advantages  of  living 
in  communities  similar  to  those  described  in  the 


THE  NEW  ERA  IN  POLITICS  265 

last  chapter.  It  requires  but  little  imagination  to 
visualize  a  farm  life  that  would  be  alluring  to  mil- 
lions of  people.  It  has  been  done  in  the  garden 
villages  of  England  and  Germany,  where  expert 
town-planners,  architects,  builders,  and  educators 
have  built  new  towns  or  subui-bs  in  which  every 
possible  convenience  has  been  provided  at  a  very 
moderate  cost  by  the  substitution  of  the  co-operative 
motive  for  the  speculative  motive.  Increasing  land 
values  have  been  kept  for  the  community.  The 
houses  have  been  designed  not  to  rent,  but  to  sell 
on  easy  terms.  Water,  gas,  and  electric  light  and 
power  have  been  produced  by  the  community  and 
sold  at  cost.  Co-operative  buying  and  selling  have 
cut  out  the  unnecessary  middlemen,  while  provision 
for  education  and  recreation  has  added  cultivation 
and  happiness  to  persons  of  small  means,  who  have 
been  lifted  from  the  sordid  siu"roundings  of  the  tene- 
ment into  a  standard  of  reasonable  comfort  by  the 
substitution  of  the  co-operative  motive  for  that  of 
private  profit  and  the  elimination  of  the  specula- 
tive element  from  the  community. 

The  same  thing  can  be  done  for  agriculture.  It 
can  not  only  be  made  attractive  to  millions,  but 
profitable  as  well.  And  such  a  programme  of  agri- 
culture-building involves  the  various  elements  de- 
scribed in  the  preceding  chapters,  just  as  the  prob- 
lem of  city-building,  which  has  made  such  progress 
in  other  countries,  involves  the  combination  of  simi- 


266  THE  HIGH  COST  OF  LIVING 

lar  co-operative  elements.  Among  the  measures 
that  must  be  incorporated  into  a  programme  for 
the  reclamation  of  agriculture  are  the  following: 

One — the  taxation  of  land  values  as  a  means  of 
ending  speculation  and  the  cheapening  of  land. 
Other  reforms  are  dependent  upon  easy  access  to 
the  land  and  the  ending  of  all  ownership  but  own- 
ership sanctioned  by  cultivation.  No  man  has  a 
right  to  more  land  than  he  will  use  and  use  profit- 
ably. No  man  has  a  right  to  withhold  the  resources 
of  the  earth  from  others.  Land  is  the  common  en- 
dowment of  humanity.  It  is  the  gift  of  nature  to 
all  people.  The  only  title  sanctioned  b}'  justice  is 
the  title  of  use,  and  taxation  is  an  easy  method  and 
a  just  method  for  opening  up  the  resources  of  the 
earth  to  labor. 

Two — credit  must  be  socialized.  Next  to  the  land 
it  is  the  most  essential  of  all  elements  to  the  en- 
couragement of  agriculture.  There  is  no  reason  why 
the  farmer  should  pay  10  per  cent,  interest  on  his 
loans  for  the  mere  privilege  of  transportation  to 
the  market.  Certainly  it  is  one  of  the  absurdities 
of  our  system  that  money  can  be  had  by  hundreds 
of  millions  for  speculation  on  the  stock  exchange, 
for  speculation  in  wheat  and  corn  and  meat,  in  eggs 
and  in  poultry,  at  from  3  to  5  per  cent.,  while  the 
farmer,  with  the  best  security  in  the  world,  has  to 
pay  from  10  to  12  per  cent,  for  his  commercial  loans. 

Credit  should  be  an  agency  for  production.   Bank- 


THE  NEW  ERA  IN  POLITICS  267 

ing  should  be  an  agency  of  service.  Yet  our  credit 
resources  are  concentrated  in  the  speculative  cen- 
tres, principally  in  New  York,  when  if  our  banking 
system  were  designed  for  service  and  adjusted  to 
the  encouragement  of  production,  it  would  be  dis- 
tributed as  widely  as  possible  throughout  the 
counti"}'. 

Agriculture  waits  on  such  an  extension  of  the 
farm-loan  act  that  the  farmer  can  borrow  to  market 
his  crops,  so  that  the  tenant  can  borrow  to  operate 
his  holding,  so  that  the  tenant  and  the  farm-laborer 
can  borrow  to  buy  a  piece  of  land  and  become  a 
home-owTier.  We  must  end  the  conditions  described 
in  earlier  chapters  in  Texas  and  Oklahoma,  where 
the  farro.ers  and  the  tenants  are  the  prey  of  the 
banks,  which  make  use  of  their  power  not  only  to 
keep  the  farmer  in  subjection  but  to  secure  posses- 
sion of  the  land  by  foreclosure  as  well. 

Three — tenancy  must  be  ended.  It  has  no  place 
m  any  country,  least  of  all  in  Ajnerica.  Tenancy  is 
a  curse  to  the  tenant.  It  is  a  curse  to  the  land. 
Tenancy  means  shiftless  cultivation.  It  means  the 
exhaustion  of  the  soil.  It  means  lack  of  initiative, 
industry,  or  ambition.  Wherever  tenancy  is  found 
there  we  have  ignorance.  There  we  have  a  decay 
of  civic  virtues.  There  we  have  the  kind  of  condi- 
tions that  prevailed  in  Ireland,  that  prevail  to-day 
in  England,  that  prevail  in  every  country  that  has 
failed  to  concern  itself  over  the  condition  of  the 


268  THE  HIGH  COST  OF  LIVING 

tenant  and  take  steps  to  end  these  conditions  by 
converting  the  tenant-farmer  into  a  self-respecting 
owner.  The  stories  of  how  Ireland  has  been  con- 
verted from  a  land  of  poverty  and  ignorance  into  a 
prosperous  country  are  but  indicative  of  the  change 
which  comes  even  to  the  poorest  when  the  alchemy 
of  ownership  is  permitted  to  play  upon  the  worker 
and  awaken  even  the  most  shiftless  into  self-respect, 
ambition,  and  a  desire  for  better  things. 

Four — all  of  these  elements  enter  into  and  form 
part  of  the  farm  colony.  This  is  the  natural  organ- 
ization of  farming.  Co-operative  farming  is  to  be 
the  farming  of  the  future.  Not  compulsory  co-op- 
eration; not  state  [socialism,  but  the  farm  colony  in 
which  many  of  the  present  wastes  will  be  eliminated 
and  the  extortion  of  land  speculator,  money-lender, 
and  distributor  will  be  ended.  The  farm  colony  in- 
volves cheap  land.  In  those  countries  that  have  de- 
veloped it,  the  entrance  of  the  state  into  the  market 
as  a  buyer  has  immediately  increased  the  price  of 
land.  Like  every  other  activity  of  society  it  added 
to  the  unearned  increment  of  the  owners.  Land- 
value  taxation  is  a  necessary  corollary  of  the  farm 
colony.  Otherwise  the  land  speculator  will  reap  the 
advantages  of  the  change  by  an  added  burden  to  the 
colonists. 

Credit,  too,  must  be  provided  at  a  cheap  rate  and 
on  easy  conditions.  And  such  credit  can  only  be 
supplied  by  action  of  the  state  under  some  such 


THE  NEW  ERA  IN  POLITICS  269 

agency  as  the  farm  loan  board,  which  is  now  hniited 
in  its  advances  to  existing  farmers.  And  in  those 
countries  which  have  developed  the  farm  colony,  the 
buyer  is  given  from  thirty  to  fifty  years  in  which  to 
pay  for  his  purchase.  His  interest  rate  is  from  4  to 
5  per  cent.,  which  includes  an  annual  payment  for 
the  amortization  of  the  loan.  In  this  way  the 
farmer  is  relieved  of  the  fear  of  foreclosure;  he  is 
free  from  the  tyranny  of  the  local  banker,  who  is 
too  often  in  collusion  with  the  distant  miller,  ware- 
houseman, speculator  or  food  exchange.  Cheap 
credit  also  permits  of  the  purchase  of  machinery,  of 
modern  equipment  and  the  buying  of  good  stock, 
seeds,  and  other  accessories  to  modern  farming. 

The  farm  colony  is  planned  in  all  its  details  as  is 
the  garden  city.  There  is  provision  for  education 
and  recreation.  The  houses  are  reasonably  close 
together.  There  are  stores,  schools,  telephones,  and 
other  accessories  of  modern  life.  Materials  and  sup- 
plies are  bought  in  quantities,  which  reduces  the 
cost.  Co-operation  is  provided  in  buying  and  selling. 
Marketing  is  made  easy,  and  the  farmer  is  protected 
by  the  state  in  the  marketing  of  his  crops.  The 
farm  colony  aims  at  the  creation  of  a  self-contained 
life,  with  as  many  of  the  advantages  and  pleasures 
which  the  city  offers  as  possible. 

Five — finally  the  means  of  distribution  must  be 
socialized.  The  story  of  Australia  and  Denmark 
indicate  the  extent  to  which  railroads  become  an 


270  THE  HIGH  COST  OF  LIVING 

agency  of  service  when  owned  by  the  state.  Freight 
rates  are  cheapened.  Low  rates  are  provided  for  the 
transport  of  would-be  farmers  from  one  part  of  the 
country  to  the  other.  Farm-laborers  are  carried 
where  needed.  Low  rates  are  made  on  fertilizers  and 
farm  machinery.  The  local  freight  agent  becomes 
the  representative  of  the  farmer  in  the  receipt  and 
transhipment  of  his  produce  to  the  state-owned 
abattoir,  or  cold-storage  warehouse,  while  the  ter- 
minals at  the  seaboard  or  in  the  cities  are  part  of  a 
nation-wide  system  for  collective  marketing  with 
the  minimum  of  cost  to  the  producer  and  the  con- 
sumer as  well.  The  collection  and  grading  of  prod- 
uce for  export  and  sale,  the  substitution  of  a  public 
for  a  private  agency  in  the  accounting  of  the  pro- 
ceeds, the  organization  even  of  water  transport,  are 
all  part  of  the  new  programme  of  agriculture  which 
must  be  undertaken  by  the  State  and  the  nation  if 
we  would  free  the  production  of  food  from  the  ex- 
tortion of  the  chain  of  speculators  and  middlemen 
wliich  now  encompass  the  producer  from  the  mo- 
ment his  produce  leaves  the  farm  until  it  reaches  its 
ultimate  destination,  possibly  five  thousand  miles 
away. 

The  motive  of  such  a  programme  is  not  paternal- 
ism but  freedom.  There  are  some  things  which  the 
state  must  do  just  to  insure  freedom.  When  these 
functions  are  left  in  private  hands  freedom  is  de- 
stroyed.    Far  from  state  ownership  in  these  fields 


THE  NEW  ERA  IN  POLITICS  271 

being  out  of  harmony  with  our  traditions,  they  are 
of  the  veiy  essence  of  that  freedom  that  lies  at  the 
heart  of  our  achievements  in  industry,  in  commerce, 
and  in  the  whole  economic  field.  Free  land  explains 
the  first  three  centuries  of  our  life.  Free  access  to 
opportunity  is  the  one  big  factor  that  has  changed 
the  immigrant  peasant  of  Ireland,  Scotland,  Scandi- 
navia, Italy,  or  Germany  into  the  free-minded 
American  citizen.  And  it  is  in  those  fields  of  en- 
deavor where  freedom  is  still  preserved  that  Ameri- 
can ingenuity  and  American  skill  have  made  the 
most  remarkable  advances. 

And  agriculture  waits  on  a  programme  of  freedom 
— freedom  of  access  to  the  land,  freedom  of  access 
to  transportation  and  marketing  and  cheap  and 
adequate  credit.  With  these  assured  we  can  safely 
rely  on  the  desires  of  men  to  take  them  to  the  land, 
as  it  has  for  thousands  of  years,  in  every  country 
and  in  every  clime,  when  opportunity  was  open  to 
them. 


INDEX 


Abattoirs,  monopoly  of,  p.  51; 

German,  p.  141;  necessity  for 

public,  p.  171 
Agriculture,  possibilities  of,  pp. 

13,  18;    area,  United  States, 

p.   14;    outstanding  facts  of, 

p.   16;    why   unprofitable,  p. 

97;   suggestions  as  to,  p.  192; 

gravity  of,  p.  260;  Rome  and 

England,  p.  261 
Anthracite  coal,  monopoly  in,  p. 

71 
Australia,  land  taxation  in,  p. 

129;   land  colonies  in,  p.  131; 

land  settlement  in,  p.  235 

B 

Baltimore,  markets  in,  p.  170 
Bankers,  power  of,  p.  98 
Boards  of  Trade,  p.  41 


California,  fruit-growers,  pp.  96, 
159;  land  monopoly  in,  p. 
207;  state  colonies  in,  p.  257 

Canada,  single  tax  in,  p.  232 

Car  shortage,  p.  80 

Cattlemen,  p.  46 

Cattle-raising,  losses  in,  p.  47;  re- 
duction in  production,  p.  72 

Chicago  Board  of  Trade,  p.  28 

Cleveland,  fish  markets  in,  p.  169 

Coal,  production  of,  limited  by 
railroads,  p.  78;  cost  of,  p.  179 

Cold  storage,  pp.  53,  60 

Co-operation,  in  California,  p. 
96;  Denmark,  p.  Ill;  in 
marketing,  p.  159 


Copenhagen,  p.  103 
Corn  crop,  p.  29 
Cost  of  living,  increase  of,  p.  21 
Credit,  essential  to  agriculture, 
p.  240;  new  forms  of,  p.  266 

D 

Dairy  farming,  Germany,  p.  147 
Demand  and  supply,  law  of,  p.  19 
Denmark,  p.  103 ;  marketing  in, 

p.  160 
Distribution  of  food,  p.  67 
Dresden,  abattoirs  of,  p.  143 


E 


Exports,  manipulation  of,  p.  38; 
Denmark,  p.  114 


Farm  colonies,  pp.  250,  268 
Farmers  and  usury,  p.  242 
Farming,    unprofitable,    p.    31; 

proper  conditions  of,  p.  228 
Farms,    number    of    in    United 
States,  p.  17;   size  of  in  Den- 
mark, p.  110 
Fast-freight    hues,    government 

ownership  of,  p.  186 
Finance,  organization  of,  p.  5 
Fish  markets,  Cleveland,  p.  169 
Flour,  speculation  in,  p.  32 
Food,  disorganization  of  produc- 
tion, p.  3;   exchanges,  pp.  54, 
56;    reduction  in  production 
of,  p.  95;    distribution  of,  p. 
100;    possibilities  of  produc- 
tion, p.  101 


273 


274 


INDEX 


Foodstuffs,  increase  in  cost  of,  p. 

22;  production,  p.  24 
France,  population  of,  p.  14 
Fraud  in  land  grants,  p.  205;  in 

sale  of  land,  p.  213 
Free  land  in  United  States,  p. 

196 


G 


Gambling  in  wheat,  pp.  27,  43 

Garden  villages,  England  and 
Germany,  p.  265 

Germanj'^,  population  of,  p.  14; 
food  control  in,  p.  139;  mar- 
kets, p.  145  ;  comparison  with 
American  methods,  p.  154; 
land  colonies  in,  p.  252 

Grading,  fraudulent,  grain,  p.  39 

Grain  exchanges,  p.  33 

Great  Britain,  food  supply  in, 
p.  16;  agricultural  conditions 
in,  p.  262 

Groimd-rents,  New  York,  p.  178 

H 

Home  ownership,  farmers,  p.  221 
Hoover,  Herbert,  pp.  33,  58 
Housing  question,  p.  180;  effect 
of  land  tax  on,  p.  238 


Immigration,    to    Europe   after 

the  war,  p.  218 
Increase  in  cost  of  hving,  p.  21 
Industry,  organization  of,  p.  6 
Ireland,  land  colonies  in,  p.  251; 

conditions  in,  p.  263 
Irrigation,  Australia,  p.  133 


colonies,  Denmark,  p.  109; 
AustraUa,  pp.  128,  130;  taxa- 
tion, AustraUa,  p.  129;  col- 
onies, Austraha,  p.  131;  specu- 
lative value  of,  p.  198;  mo- 
nopoly, pp.  202-206;  specula- 
tion, freeing  from,  p.  235; 
colonies,  Russia,  p.  253 
Land  values,  increase  of,  p.  17 

M 

Marketing,  difficulties  of  to 
farmers,  p.  94;  organization 
of,  p.  158 

Markets,  Germany,  p.  145; 
United  States,  p.  167;  New 
York,  failm'e  of,  p.  168 

Meat,  retail  dealers,  p.  90;  re- 
duction in  production,  p.  92; 
supply,  Germany,  p.  148 

Middlemen,  p.  65;  abohshed  in 
AustraUa,  p.  124 

MUk,  p.  69;  direct  sale  of,  in 
Germany,  p.  147;  municipal 
control  of,  p.  172 

MinneapoUs,  Chamber  of  Com- 
merce, p.  42;  Board  of  Trade, 
p.  28 

Monopoly,  meat,. p.  48;  banking, 
p.  49;  slaughtering,  p.  51; 
food,  p.  99;  extent  of,  p.  182; 
land,  pp.  202-206;  timber,  p. 
209;  effect  of  single  tax  on, 
p.  237 


N 


New  York,  food  monopohes  in, 
p.  67;  state-market  proposals, 
pp.  160-164 

Non-Partisan  League,  pp.  30, 
232 


Ladd,  E.  F.,  p.  44 
Laissez-faire  philosophy,  p.  259 
Land,  unimproved,  p.  17;   own- 
ership of,   Denmark,  p.   107; 


O 

Ocean  freights,  p.  39 
Oklahoma,  usuiy  in,  p.  242 


INDEX 


275 


Pacific  railroad  grants,  p.  203 
Packers,  pp.  46-48,  88;    profits 

of,  p.  100 
Parcel-post,  p.  175;  in  Germany, 

p.  141 
Pinchot,  Amos  R.  E.,  p.  21 
Population,  urban,  p.  16;  density 

of  in  various  countries,  p.  15 
Price  regulation,  Germany,  pp. 

146-151;  United  States,  p.  155 
Production  of  food,  p.  24 
PubUc  lands,  pp.  197,  203 
Public  selling  agencies,  p.  109 

R 

Railroads,  combination  with 
middlemen,  p.  69;  England 
and  France,  p.  77;  importance 
of,  p.  84;  government  owner- 
ship of,  Australia,  p.  117; 
Germany,  p.  140;  transporta- 
tion, cost  of,  p.  180;  power  of, 
p.  185 

Refrigeration,  Austraha,  p.  125 

Rent,  increase  of,  p.  177 

Resources,  waste  of,  p.  259 

Retail  prices,  p.  66 

Rome,  agricultural  conditions  in, 
p.  261 

Russia,  land  colonies  in,  p.  253 


S 


Den- 


Savings-banks    deposits, 

mark,  p.  105 
Shoes,  increase  in  cost  of,  p.  23 
Single  tax,  p.  228 


Slaughtering,  public,  Germany, 

pp.  141-143 
Speculation  in  wheat,  pp.  33-37; 

in  food,  pp.  55-59 
State   socialism,   Australia,   pp. 

117-137 
Sugar,  p.  62 


Taxation,  land  values,  Australia, 
pp.  129,  266 

Tenancy,  p.  117;  America,  p. 
108;  Denmark,  p.  108;  farm- 
ers', p.  220;  extent  of,  p.  221; 
conditions,  p.  222;  ending  of, 
p.  267 

Terminal  markets,  p.  161 

Timber-land,  monopoly  of,  pp. 
180,  209 

Transportation,  importance  of, 
p.  84  (see  Railroads) ;  organiza- 
tion of,  p.  174 

Truck-gardening,  p.  93 

U 

United  States,  agricultural  con- 
ditions in,  p.  157 
Usury,  Oklahoma,  pp.  242-247 

W 

Wages,  increase  of,  p.  21 
Wealth,  inequitable  distribution 

of,  p.  23 
Wealth  production  in  the  United 

States,  p.  181;   possibihty  of, 

pp.  184-190 
Wheat  exchanges,  p.  27 


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